FEDERAL COURT OF AUSTRALIA

Kedem v Johnson Lawyers Legal Practice Pty Ltd [2013] FCA 432

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    The applicant pay to the respondent costs of the application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This application concerns a claim by Einav Kedem (the applicant) against Johnson Lawyers Legal Practice Pty Ltd (the respondent) for damages.

2    On 29 January 2013, I ordered that there be a separate trial, pursuant to r 30.01 of the Federal Court Rules 2011 (Cth), to determine certain preliminary issues, on the assumption that the applicant will prove all the facts he alleges supplemented by those facts which he admits. The preliminary issues are:

(a)    whether the claim under the Trade Practices Act 1974 (Cth) (the TP Act) is statute barred;

(b)    whether the claim under the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) is statute barred;

(c)    whether the negligence claim is statute barred;

(d)    whether the claim for failing to act in the best interests of the applicant (whether that be of a contractual nature or for negligence) is statute barred;

(e)    whether the Court has accrued jurisdiction to hear the common law claims pursued by the applicant;

(f)    whether the applicant is estopped from alleging in these proceedings that he did not, in 2005, owe money to the respondent in respect of its fees; and

(g)    whether the applicant is estopped from bringing the claim for negligence.

To avoid doubt, I indicated that those orders were intended to include the consideration and determination of the applicant’s claimed entitlement to an extension of time to bring his claims or any of them, if an extension of time were necessary.

3    The TP Act is now entitled the Competition and Consumer Act 2010 (Cth), but as the relevant conduct is alleged to have occurred prior to that name change, I shall continue to use the reference to the TP Act.

4    At the same time, I made orders for the filing and service of affidavits as the parties considered appropriate, for the exchange of written submissions, and for resolution of those issues on the basis of the affidavit evidence and submissions. The parties have filed their written submissions: the applicant on 28 February 2013, and the respondent on 13 March 2013. I note that the applicant has filed a further document on 1 May 2013. In the normal course, I would not have regard to that material as it was filed well outside the permitted time. It was received when a draft of this judgment was well advanced. As the applicant is a litigant in person, I have looked at that material. It does not cause me to change the conclusions I had provisionally reached and I did not regard it as necessary, in that circumstance, to give the respondent an opportunity to respond.

5    The respondent says that the Court does not have jurisdiction to entertain the claims for damages for breach of contract and in tort. I reject that contention. It cannot, of course, be a contention made in respect of the claims based on contraventions of the TP Act or the ASIC Act. As I accept that those claims are genuinely made by the applicant, and are not merely a contrived device to secure the jurisdiction of the Court, it is properly seized of the matter generally including the claims for damages for breach of contract and in tort: Re Wakim; Ex parte McNally (1999) 198 CLR 511.

6    For the reasons set out below, in my view, the application of the applicant should be dismissed. The claims, in so far as they depend on the TP Act and the ASIC Act, are statute barred and there is no basis upon which the time for bringing those claims can be extended. As I have said, I am satisfied that, in the circumstances, the Court has jurisdiction to hear and determine the claims for negligence and breach of contract, but they are also statute barred; and although there is power to extend the time to bring those claims, no factual foundation for doing so is made out. In addition, to the extent that there is in the circumstances a discretion available to extend the time to bring those claims, that discretion is not exercised in favour of the applicant.

The Material before the Court

7    Order 1 of the procedural orders made on 10 August 2012 was an attempt to obtain some focus to the issues raised by the applicant. It required the applicant by 7 September 2012 to file and serve a document which:

(i)    sets out the detail of the property in the subject of the dispute;

(ii)    sets out what happened to the property;

(iii)    sets out when the respondent was engaged to act for the applicant in relation to the dispute;

(iv)    sets out separately each occasion when the respondent was given instructions in relation to the handling of the dispute including:

(a)    whether the instructions were written or oral;

(b)    the terms of the instructions; and

(c)    the detail of how the instruction was not complied with;

(v)    sets out separately each step taken by the respondent which the applicant says was negligent in the handling of the dispute including:

(a)    when the step was taken; and

(b)    why the step was negligent;

(vi)    sets out separately each step which the applicant says should have been taken by the respondent which the applicant says it was negligent not to have taken in the handling of the dispute including:

(a)    when the step should have been taken; and

(b)    why it was negligent not to have taken the step;

(vii)    sets out what the applicant says is his claim for damages including the amount of the claim arising from:

(a)    the failure to act in accordance with instructions; and

(b)    the negligence he alleges;

(viii)    sets out why the claim has not been brought until 13 July 2012 including all details of the matters the applicant relies upon for being granted the extension of time to bring his claim which he seeks; and

(ix)    sets out a list of each document which the applicant intends to produce to the court to support his claim.

The applicant’s affidavit of 5 September 2012 is the starting point of the process contemplated for the refinement of issues.

8    In addition to the written submissions of the applicant, the Court has considered the application of 13 July 2012, the affidavits of the applicant of 13 July 2012, 1 August 2012, 5 September 2012 and 7 September 2012, and a document entitled “Response to Document Filed by the Applicant pursuant to Order 1 of Justice Mansfield made on 10 August 2012” filed on 2 November 2012, all relied upon by the applicant. The last-mentioned document, despite its title, is a response of the applicant to the respondent’s Response document of 2 October 2012 referred to in the next paragraph.

9    The Court has also considered the written submissions of the respondent, the “Documents Relied upon by Respondent” filed on 2 October 2012, a document entitled “Response to Document Filed by the Applicant Pursuant to Order 1 of Justice Mansfield made on 10 August 2012”, also filed on 2 October 2012 which responds to the applicant’s affidavit of 5 September 2012, the “Reply to Response of Applicant” filed on 28 November 2012, the “Additional Documents Relied upon by the Respondent” also filed on 28 November 2012, and the affidavit of John James a solicitor employed by the respondent of 12 March 2013.

The DEALINGS WITH PEPPER

10    The supporting affidavit of 13 July 2012 was somewhat difficult to fully understand. Hence, the order of 10 August 2012. The affidavit is quite brief. It says the applicant seeks an extension of time to bring a negligence action against the respondent, arising out of his instructions in early July 2005 to instruct a named barrister to “settle the matter on my behalf” and that the respondent did not comply with the instruction. It does not adequately explain the background facts, so the assertions in paras 3, 4 and 5 of that affidavit and the annexures do not demonstrate how the claim is to be made out or why the extension of time is claimed. One annexure is an “Outline of Argument of the Defendant” for use in Supreme Court of South Australia Action No 1112 of 2004 (the Supreme Court action) in which Pepper Finance Corporation Ltd (Pepper) is the plaintiff and the applicant is the defendant. It concerned a summons for possession resisted by the applicant (as defendant). The material in the affidavits indicates the applicant disputed the adequacy of the notices given under the Law of Property Act 1936 (SA) (the LP Act), or obtained waiver of the notices, and disputed the amount of the debt due, and also sought an order for discretionary refusal of the order for possession and for relief against forfeiture.

11    The affidavit of 1 August 2012 is also difficult to understand as it largely consists of a series of specific responses to particular matters, but without context, and asserts a series of steps taken by the respondent or allegations or arguments by him, again without the factual starting point asserted so that it could be properly comprehended. The annexures include orders made in the Supreme Court action on 2 August 2005 including an order for possession in favour of Pepper and dismissing the applicant’s application for relief against forfeiture. It also includes the reasons for those orders of Judge Withers (the Judgment). Much of the affidavit criticises those reasons. The annexures also included a letter from a Master’s Clerk of the Supreme Court to the respondent referring to another Supreme Court Action No 1704 of 2010 apparently brought by the respondent against the applicant.

12    The affidavit of 5 September 2012 (which the affidavit of 7 September 2012 corrects by changing the amount of the claimed losses due to an arithmetical error) is also hard to follow, although the applicant has endeavoured to comply with the direction given. From that affidavit, and the other material before the Court, I record the following findings. Mostly they are not contentious. Many are recorded also in the Judgment. Where there is a need to address particular evidence, that is identified.

13    The applicant was the owner of two properties at 5 and 5A Lorraine Avenue, Clarence Park, South Australia. The applicant mortgaged the two properties to Pepper to secure a loan of $524,025 on 18 March 2004. The loan was for a period of 12 months, and so in any event became repayable on 18 March 2005.

14    The property at 1/5 Lorraine Avenue suffered fire damage to the extent of about $130,000 damage. The loss was insured, and the applicant made a claim against the insurer to cover the cost of its reinstatement.

15    Within a few months of the mortgage, a dispute arose between Pepper and the applicant about the payment of interest under the mortgage. Pepper claimed the applicant was in default, and commenced charging him at a “default” rate of interest and for legal fees. The applicant disputed that claim. It is necessary to refer to the course of that dispute in some detail.

16    On 2 July 2004, Pepper gave the applicant Notice of Default and Intention to Sell, pursuant to s 132 of the Real Property Act 1886 (SA) and s 55A of the LP Act for arrears and costs. There was a further Notice of Acceleration of Debt and Intention to Sell given on 11 August 2004. By that notice, Pepper claimed that the full debt under the mortgage was payable.

17    At [10] of the Judgment, it is recorded that the applicant’s affidavit of 24 February 2005 in the Supreme Court action acknowledged that the full amount of arrears when the first Notice of Default was issued was not then paid, and that Pepper was then entitled to accelerate repayment of the full amount of the loan.

18    Pepper applied for possession of the two properties. The applicant’s then solicitors received in a letter of 18 October 2004 a settlement proposal from Pepper’s solicitors offering to adjourn its claim for three months and not to reinstate the claim if the applicant paid the interest arrears then of $18,972 and costs of $2597 and fees of $520 and maintained regular payments of interest. The letter contained other terms also, referred to later in these reasons. The applicant instructed his then solicitors to put a counter-offer. It was rejected. As a matter of law, the applicant could no longer accept the previous offer of Pepper, unless it was revived or some other agreement reached. On 19 October 2004, the applicant then wrote direct to Pepper’s solicitors purporting to accept the offer in the letter of 18 October 2004. On 22 October 2004 he paid $22,090. The Judgment records that there is a dispute between Pepper and the applicant about the terms of any agreement then reached. As noted, the letter of the applicant constituted a fresh offer by him to accept the previous proposal. He says the acceptance by Pepper of the $22,090 indicates that some agreement between the applicant and Pepper was reached as a result. Pepper did not accept that.

19    The applicant then complained, after 22 October 2004, that whilst he continued to pay ordinary interest payments, he was being charged at the default rate. He said that was not consistent with the agreement between himself and Pepper. He also said that the possession summons should be dismissed because that was part of the agreement with Pepper, on which he had paid $22,090.

20    In the meantime, it appears the applicant had received an insurance payment of $129,800 in about October 2004 for the fire damage to part of one of the properties. He said that he was awaiting a further payment of $33,500. He claimed he was proposing to repair and reinstate the damaged property.

21    The loan agreement was to expire on 19 March 2005 when the full amount was repayable in any event. The Supreme Court action was further adjourned while the applicant sought to refinance the loan.

22    Ultimately, the Supreme Court action was listed for hearing on 4 July 2005. That was at a time when, unless there had been some further agreement between the applicant and Pepper, the full mortgage debt was due and payable (although there may have been some ongoing dispute about the amount of interest and costs payable under the mortgage).

23    In the meantime, the applicant had changed solicitors (not the respondent). On 6 June 2005, he filed a defence and counterclaim in the Supreme Court action, alleging:

(1)    unconscionable conduct on the part of Pepper, contrary to s 12CB of the ASIC Act;

(2)    waiver by Pepper of its right to proceed on the Notices of Default and of Acceleration of Debt by reason of a settlement reached in October 2004; and

(3)    wrongful claims for costs by Pepper, so that the statements of indebtedness including those costs were inaccurate, and that impeded his ability to refinance the loan.

He sought orders dismissing Pepper’s claim and alternatively relief against the enforcement of the mortgage under s 55A(3) of the LP Act, and he also sought accurate loan account statements (excluding default interest, dishonour fees and litigation costs) from Pepper.

24    A further affidavit of the applicant of 7 June 2005 filed in the Supreme Court action raised a number of other matters, included:

(a)    a claim that broker’s fees of $2970 had been debited under the mortgage when they were never paid by Pepper;

(b)    the assertion that he had refused to pay monthly interest payments as claimed by Pepper, because he was improperly charged default interest;

(c)    a letter from Pepper’s solicitors of 22 March 2005 setting out what Pepper said was agreed in October 2004, and that he said that it did not reflect what the applicant said had then been agreed;

(d)    a claim that there was an overstatement by about $8500 of the loan account balance; and

(e)    a claim that the claimed legal costs were excessive.

25    By that time, it appeared that the applicant did not intend to reinstate the damaged property, because he referred to a redevelopment on the property involving new buildings being constructed.

26    The matters raised by the applicant set out above were responded to by an affidavit of an officer of Pepper. It is not necessary at this point to note those responses. They were not all accepted by the Master who made the decision.

27    The hearing of the Supreme Court action took place on 4 July 2005. It was only shortly before that hearing, on 30 June 2005, that the applicant first consulted the respondent, and the respondent filed a notice of acting for the applicant only on 4 July 2005. The hearing proceeded, with counsel previously retained for the applicant appearing on instructions from the respondent. The Judgment was given on 2 August 2005.

The Judgment

28    After referring to the principles applicable when an application for a summary possession order is made, the Judgment at [27] noted that the real issue was whether Pepper compromised its claim, as the applicant claimed, in October 2004. As the offer in the letter of 18 October 2004 was first rejected, and the subsequent payment by the applicant shortly afterwards was outside the specified time in that letter, the Master decided there was no agreement in the terms of that letter. In addition, as the applicant had not moved to reinstate the damaged property (and thus to restore its value) after he received the $129,800 insurance funds in October 2004, he had breached a significant term of that letter in any event, so any agreement could not be enforced by him: see the Judgment at [40]-[41].

29    Consequently, Pepper remained entitled to recover the full indebtedness under the mortgage.

30    In the Judgment at [42] and [43], the remaining issues raised by the applicant were said not to excuse his ongoing failure to pay at least the interest which he accepted was payable under the mortgage. Moreover, the term of the mortgage had expired in any event, and there was no agreement (nor any agreement asserted by the applicant) that the term of the loan and of the mortgage that secured it should be extended.

31    For those reasons, but principally the latter, no order was made under s 55A(3) of the LP Act relieving the applicant from the consequences of having failed to repay the loan and the interest payable under it. In those circumstances, the applicant’s claim for relief under s 55A(3) was refused. An order for summary possession of the property was made. The applicant was ordered to pay Pepper’s costs of the application. The question of whether Pepper should provide different and more detailed loan account statements was stood over.

The Facts

32    The parties have exchanged statements of material facts. The following represents uncontentious facts. It is in large measure a brief summary of the above, to focus the issues between the applicant and the respondent. It also sets out in more detail the dealings between the applicant and Pepper, especially in October 2004, as that is important to understanding the present issues.

33    The applicant as the owner of the properties granted a registered mortgage over the properties to Pepper to secure a loan from Pepper to the applicant on 18 September 2004.

34    At some time prior to 3 September 2004, the applicant defaulted on the interest payments due. By summons dated 3 September 2004, Pepper sought an order for possession of the land and commenced the Supreme Court action against the applicant. The applicant engaged a firm of solicitors to represent him in relation to the action.

35    By letter dated 18 October 2004 from Pepper’s solicitors, Pepper put an offer of settlement to the applicant with the following terms:

(1)    the applicant was to pay to Pepper the sum of $22,090 by 22 October 2004;

(2)    the applicant was to maintain minimum monthly repayments falling due under the loan;

(3)    the applicant was to apply the proceeds received from an insurance claim in relation to fire damage to one of the dwellings on the property towards reinstating that damaged dwelling; and

(4)    if the terms referred to in paragraphs (2) and (3) were being complied with, at the next return date in the action, Pepper would discontinue the Supreme Court action.

36    On 19 October 2004, the applicant’s then solicitors wrote to Pepper’s solicitors rejecting Pepper’s offer and setting out a counter-offer in response to the letter of 18 October 2004. That offer was rejected by Pepper. The applicant then terminated the retainer with those solicitors. On 19 October 2004, the applicant sent a facsimile to Pepper’s solicitors purporting to accept the Pepper offer. On 22 October 2004, the applicant paid the sum of $22,090 to Pepper.

37    There was an issue about whether that produced a settlement of the claim by Pepper, and if so on what terms.

38    The applicant was then represented by two further firms of solicitors in relation to the Supreme Court action, but they had ceased to act for the applicant by 28 June 2005. The action had not then resolved. The date for repayment of the loan, and any outstanding interest and costs, had in any event expired on 19 March 2005. There is nothing to suggest that the letter from the applicant of 19 October 2004 and any response to it had extended the repayment date.

39    In late June 2005, the applicant contacted the respondent to request that the respondent act for the applicant in relation to the Supreme Court action. On 30 June 2005, the applicant entered into a written retainer agreement with the respondent. On 30 June 2005, the applicant also attended the offices of the respondent and met with David Johnson of the respondent. He agreed that $300 would be deposited into the respondent’s trust account that day and a further $700 would be deposited on 4 July 2005. This arrangement was confirmed by letter dated 30 June 2005 from the respondent to the applicant. On 30 June 2005, the applicant paid the sum of $294 into the respondent’s trust account. As noted, on 4 July 2005, the respondent filed a Notice of Change of Address for Service in the Supreme Court action.

40    On 4 July 2005, argument in the action proceeded before Judge Withers in the Supreme Court action. Counsel previously engaged by other solicitors appeared for the applicant on instructions from the respondent. Judgment was reserved. On 4 July 2005, that counsel wrote to the respondent advising the respondent that it would be a good time to negotiate a resolution of the matter.

41    On 5 July 2005, the respondent issued account B00689 for a total of $2592.04 including GST to the applicant in respect of the respondent’s fees charged in accordance with the retainer in the amount of $851.40 including GST plus disbursements of $1740.64 including GST, the latter mainly being counsel fees. On the same day, the respondent sent the applicant a letter requesting an additional $1000 to be deposited into the respondent’s trust account and enclosing a copy of B00689. On 6 July 2005, the applicant paid $700 against B00689.

42    To date, the applicant has made no further payments for or on account of the respondent’s fees and disbursements or any further payments into its trust account, although the applicant says he has paid $1500 direct to counsel and $994 to the respondent. The receipt from counsel the applicant has presented shows this sum was received for outstanding counsel fees relating to work done on earlier instructions from other solicitors and not for the attendance and argument on 4 July 2005.

43    On 8 July 2005, the respondent wrote to the applicant stating that B00689 had to be paid in full and that a further $1000 had to be deposited into the respondent’s trust account before the respondent could take further steps in relation to the action. The applicant says he did not have to pay the amounts sought as an earlier payment of $1000 had not been acknowledged.

44    On 12 July 2005, the applicant spoke with Louis Leventis of the respondent by telephone and in the course of that conversation gave the respondent instructions regarding settlement of the action. Mr Leventis produced a contemporaneous file note of that conversation setting out the content of the conversation setting out instructions for settlement as follows:

(1)    the dwellings of the land need not be reinstated;

(2)    the applicant need not pay anything to Pepper until:

    a clean bank statement has been provided,

    the applicant is given six months to refinance,

    the original loan amount goes back to approximately $546,000 by the end of July 2005; and

(3)    the legal fees incurred by the applicant in relation to the action were to be paid by Pepper.

45    The applicant says the focus of the conversation was inappropriate as he thought the “matter” had settled, presumably by his communication with Pepper on 19 April 2005 and his payment of money.

46    On 15 July 2005, Mr Leventis spoke with the applicant by telephone and made a contemporaneous file note of that conversation. The material effect of that conversation was:

(1)    that the applicant wanted a letter sent to Pepper’s solicitors noting that:

    no time limit was placed on reinstatement of the dwellings on the land under the Pepper offer and that in any event redevelopment would constitute reinstatement for the purposes of the Pepper offer; and

    approval for redevelopment of the land had been received before the Pepper offer was put to the applicant, and accordingly there was no need to obtain approval after the Pepper offer in order to show that the applicant was taking pro-active steps to reinstate the dwellings on the land; and

(2)    that the applicant wished to put the following settlement terms to Pepper:

    a clean bank statement was to be provided to the applicant by Pepper;

    Pepper was to allow the applicant six months to refinance or sell the land which time would start to run when the applicant had been provided with a clean bank statement;

    no payments were to be made by the applicant until he was able to refinance the loan;

    once the applicant had refinanced the loan, Pepper was to provide the applicant with a final pay out amount excluding any legal charges, default interest charges and any other similar charges; and

    the applicant’s legal costs in the action were to be paid by Pepper.

(3)    the respondent required the applicant to make payment of its outstanding fees and to deposit money into its trust account as previously requested.

47    On 18 July 2005, the respondent wrote to the applicant, the material effect of which was:

(1)    as of the date of the letter, $3078.64 was outstanding to the respondent in respect of its fees and disbursements;

(2)    the outstanding sum of $3078.64 had to be paid in full and an additional $1000 had to be deposited into the respondent’s trust account before the respondent would carry out further work in relation to the action including any negotiations relating to a settlement with Pepper.

48    The applicant says the respondent was negligent in failing to put before the Court “the full terms of settlement”, so he (the applicant) had to work on the basis that the matter had not settled.

49    On 19 July 2005, the applicant spoke with Mr Leventis by telephone. Mr Leventis produced a contemporaneous file note of that conversation. The material effect of that conversation was:

(1)    the applicant disputed that the accounts rendered by the respondent for work completed by the respondent and for fees paid or owed by the respondent to counsel exceeded the amounts already paid by the applicant to the respondent;

(2)    Mr Leventis asserted that accounts rendered by the respondent remained outstanding;

(3)    the applicant noted that he had not been given any draft letters for his approval setting out settlement terms in accordance with his instructions in the past;

(4)    the respondent replied that letters to Pepper setting out the applicant’s settlement terms would be produced once the respondent’s accounts were made and money put in trust; and

(5)    the applicant indicated that he would not pay the respondent’s outstanding accounts.

50    On 27 July 2005, counsel wrote an email to Mr Leventis advising that the applicant had asked counsel to act for the applicant directly. On 28 July 2005, counsel sent a letter to the applicant explaining why he could not act on the applicant’s direct instructions without an instructing solicitor. On 29 July 2005, the applicant wrote an email to counsel, the material effect of which was:

(1)    that the applicant had instructed the respondent to instruct counsel to settle the action;

(2)    that those instructions had not been followed;

(3)    that the failure to follow those instructions preceded any discussion about the respondent’s accounts; and

(4)    that the applicant had paid the respondent $1000.

51    On 29 July 2005, the applicant emailed counsel complaining of the fees of the respondent, that it had ceased to act for the applicant apparently because its fees were not paid, and that the applicant wanted the counsel to settle (or to try to settle) the claim by Peppers against him.

52    On 29 July 2005, counsel sent the applicant an email the material effect of which was that he would not act for the applicant without an instructing solicitor, and that the applicant could either work out matters with the respondent, engage another solicitor or act for himself.

53    On 29 July 2005, the applicant also spoke with Mr Leventis by telephone. Mr Leventis made a contemporaneous file note of that conversation. The material effect of the conversation was that the respondent would discount its fees by an unspecified amount in the event that money in trust for future work, which was expected to include an appeal, was forthcoming as and when required; and if there was no appeal the discount would not be effective. The detail of this conversation is denied by the applicant. The dispute about that conversation does not need to be resolved.

54    On 29 July 2005, Mr Leventis sent an email to the applicant, the material effect of which was that Judge Withers would be handing down his decision in relation to the argument on 2 August 2005, and that the respondent would discount its fees by $700 to reflect the applicant’s concerns about fees charged in respect of Mr Leventis attending the argument.

55    On 30 July 2005, the applicant sent an email to the respondent, the material effect of which was that the applicant disputed a number of the fees charged by the respondent, and that the $1000 paid by the applicant was sufficient to cover work completed by the respondent.

56    On 30 July 2005, the applicant also sent an email to the respondent, the material effect of which was that the applicant said that he had instructed the respondent to instruct counsel to settle the action, that the respondent had failed to follow those instructions and that the failure to follow instructions arose before the matter of the respondent’s accounts arose.

57    On 1 August 2005, Mr Leventis wrote an email to counsel instructing him to attend Court on 2 August 2005 to receive the decision on the argument and to contact Pepper’s solicitors to see whether the matter could be settled. The applicant noted that that left little time to explore settlement.

58    On 1 August 2005, counsel wrote an email to Mr Leventis, copied to the applicant, the material effect of which was that he (counsel) had spoken with Pepper’s solicitor in relation to settling the matter, and that Pepper’s solicitor advised that Pepper was not interested in negotiating until the decision in the argument had been handed down; and Pepper’s solicitor was not interested in considering any proposal by the applicant to sell half of the land until after the decision in the argument had been handed down.

59    On 2 August 2005, the Judgment was delivered. The applicant’s application for relief under s 55A(3) of the LP Act was refused and a possession order in favour of Pepper in relation to the property was made.

60    On 2 August 2005, counsel sent a letter to the respondent setting out his advice in relation to a potential appeal in respect of the Judgment. On 2 August 2005, the respondent sent a letter to the applicant enclosing a copy of the Judgment and a copy of counsel’s letter of 2 August 2005. The material effect of the contents of the letter was that the applicant should consider the advice of counsel in relation to the appeal and give instructions to the respondent in response, that the respondent estimated that its costs of the appeal would be $5000 to $10,000 inclusive of disbursements, that approximately $3435 in respect of counsel’s fees remained unpaid and that the applicant was required to deposit $5000 into the respondent’s trust account before the respondent would act on instructions to appeal the decision.

61    The respondent’s retainer then came to an end, at least by the latter part of August 2005. It is a disputed issue whether, in the circumstances as they may ultimately be found (subject to the present issues being considered), the respondent continued to act for the applicant from about mid-July 2005 and was obliged to have put a settlement offer to Pepper. In any event, the only terms of settlement which the applicant had authorised were those specified in the telephone conversations of 12 and 15 July 2005.

THE APPLICANT’S CLAIMS

62    It is a fair description of the applicant’s claims as expressed in the application itself as being for damages for loss resulting from:

(a)    the respondent engaging in misleading and deceptive conduct within the meaning of s 52 of the TP Act;

(b)    the respondent engaging in misleading and deceptive conduct within the meaning of the ASIC Act;

(c)    the respondent’s negligence; and

(d)    the respondent failing to act in the best interests of the applicant.

63    As noted, the professional relationship between the applicant and the respondent extended from 30 June 2005 to mid-August 2005. That is the period to which the claims relate.

64    The applicant has exhibited a detailed account of the respondent covering the period 4 July 2005 to 15 July 2005. It relates to the Supreme Court action, and in particular to the application which was the subject of the Judgment on 2 August 2005. The work detailed in the account includes attendances with the applicant to discuss a settlement proposal to be made to Pepper, including on 15 July 2005 a telephone attendance on him “re letter to Pepper’s solicitors re settlement”; and an email to counsel engaged by the respondent for the applicant “including the points to be made within the letter re settlement pursuant to Mr Kedem’s instructions”. The exhibits also include an email from the applicant to counsel of 24 July 2005 referring to a statement from Pepper including litigation fees and the comments include: “I ask you why settled with thives” (sic); and an assertion that the respondent’s solicitors refused his instruction to counterclaim “for reasons that are unknown to me”.

65    That reference to settlement is also explained by an email from the respondent to counsel of 15 July 2005 in the following terms:

I just got off a 16 minute telephone call with Mr Kedem, in that he wishes for us to write a letter to send to Lynch Meyer. The terms he wishes to place in this letter are as follows:

1.    [Need to look at Agreement] Re-instatement of the property: No time limit was ever placed as to when to re-instate the property and nothing to suggest that he will not do so. Still maintains that in the alternative, re-instatement is the same as re-development.

2.    Approval was received before the agreement was entered into, hence there was no reason to obtain approval again just to show that Mr Kedem was taking pro-active measures to re-instate the property.

3.    Clean statement.

4.    Six months to re-finance or sell the property from the time Mr Kedem is provided with a clean statement.

5.    No payments are to be made until Mr Kedem is able to obtain re-finance. Once re-finance is obtained then Pepper Finance are to provide Mr Kedem with a final pay out amount, excluding any legal charges, default interest charges and any other alike charges to re-instated the loan as it was prior to default in payment, and Mr Kedem will pay that out.

6.    Legal costs to be borne by Pepper Finance.

…

He is calling me everyday to ask what progress we are making and gets irritated when I bring up to him that he needs to pay more money into our trust account.

Please advise. Did you want to write a letter or would you like me to and for you to settle it?

66    The applicant’s affidavit says his instructions to the respondent were oral, and his recollection is that he always wanted to make a counterclaim against Pepper for all their “breechings of contract and illegal activities” (sic) but the respondent (and counsel) refused to make a counterclaim and advised him to settle with Pepper. He claims that advice was negligent. The affidavit also makes detailed reference to the Judgment. In essence, the applicant disputes many of its conclusions.

67    The affidavit is a little inconsistent about the applicant’s intention to reinstate the damaged property. At one point the applicant says he had that intention, but there was no time agreed by which he should do so (para 6) and later he says he intended to redevelop the property, no doubt ultimately to increase its value (para 9), as well as saying that in any event there was no obligation by the agreement he asserted (based on the letter from Pepper’s solicitors of 18 October 2004) to reinstate the property from the insurance funds (paras 8 and 9). That obligation was clearly specified in that letter.

68    More importantly, the applicant does not provide any evidence to dispute that the mortgage debt became repayable in March 2005. It was a loan for one year only. Pepper did not agree (and is not said to have agreed) to extend the mortgage indefinitely. On any view, when Pepper required the debt to be repaid, it was entitled to seek its repayment. The applicant over the months from March 2005 to July 2005 did not refinance that debt.

69    There is also no suggestion that the applicant appealed from the Judgment.

70    The applicant says he instructed counsel in early July 2005 to settle the matter on his behalf, after “he refused to counterclaim” but his instructions were not followed. He also gave those instructions to the respondent on 15 July 2005 but they were not complied with. He does not dispute the detailed terms of his proposed settlement, as recorded by Mr Leventis in the notes referred to above.

71    The applicant claims that the respondent failed to act in accordance with his instructions, and were negligent. He has formulated a claim (revised by his affidavit of 7 September 2012) of $2,294,000 plus a “priceless” claim that the defaults of the respondent caused him to suffer a stroke in December 2004 for which he claims “say - $5 billion dollars”.

72    As to the delay to 13 July 2012 before commencing the application, and his claim for an extension of time if one is necessary, the applicant says:

(a)    the conduct of Pepper caused him to suffer a stroke in December 2004, leaving him ill and very disabled: a medical summary dated 21 February 2005 is annexed;

(b)    he has not had access to the respondent’s files, has lost assets and many documents due to the repossession order, and could not afford legal representation;

(c)    he has made complaints to the “credit ombudsman”, ASIC, and a politician;

(d)    the solicitors took action against him in 2010 to recover their outstanding costs;

(e)    he was told that he could not make a counterclaim in the Supreme Court action.

CONSIDERATION

(a) Misleading and deceptive conduct under the TP Act

73    An action for damages resulting from a contravention of s 52 of the TP Act may be brought under s 82 of the TP Act. That section relevantly reads as follows:

(1)    Subject to subsection (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC 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 subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

74    Relief may also be awarded in respect of contraventions of s 52 of the TP Act on a discretionary basis pursuant to s 87(1A) of the TP Act. It is necessary to note only s 87 (1CA), which provides:

An application under subsection (1A) may be made at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

75    Clearly, there is a limitation period of six years from the accrual of the cause of action.

76    Under either section, the cause of action accrues, and the limitation period begins to run, when damage is first suffered by the applicant as a consequence of a contravention of s 52 of the TP Act. Any ongoing or subsequent loss does not affect the calculation of the limitation period: James v Australian and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 392.

77    In my view, the applicant’s claim arises (subject to its merits) when he became subject to the Judgment, by which possession of the properties was to pass to Pepper. His complaint is that the respondent wrongfully failed to put an offer of settlement in relation to, and so to settle, the Pepper claims before the Judgment, and did not make a counterclaim so as to prevent the Judgment. Hence, that is when the cause of action accrued. In any event, the applicant says that he suffered economic loss as a result of the misleading and deceptive conduct of the respondent in that the properties owned by him were sold by Pepper pursuant to a power of sale in October 2005. Accordingly, loss was allegedly suffered by him in October 2005. That is at the latest the starting point for the losses allegedly suffered by the applicant. In addition, as the applicant claims six years’ worth of interest on his losses, it is, by implication, the applicant’s case that at least six years have elapsed from the time that he suffered those losses to the time that he commenced the application.

78    This application was commenced on 13 July 2012. That is about six years and eight months after the end of October 2005. By that time, the limitation period for the applicant to seek relief under either s 82 or s 87 of the TP Act had lapsed.

79    The TP Act does not provide a power for the Court to extend the limitation periods in s 82(2) and s 87(1CA) of the TP Act. The respondent correctly submits that the claim for damages for contravention of s 52 of the TP Act is statute barred. In my view, the claim based on that alleged contravention must be dismissed.

(b) Misleading and deceptive conduct under the ASIC Act

80    Section 12DA of the ASIC Act prohibits persons to whom the ASIC Act applies from engaging, in trade or commerce, in misleading or deceptive conduct in relation to financial services.

81    An action for damages in relation to a contravention of s 12DA of the ASIC Act may be brought pursuant to s 12GF of the ASIC Act. That section relevantly reads as follows:

12GF    Actions for damages

(1)    A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision C (sections 12CA to 12CC) or Subdivision D (sections 12DA to 12DN) 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 subsection (1) may be commenced within 6 years after the day on which the cause of action that relates to the conduct accrued.

82    Relief may also be awarded in respect of contraventions of s 12DA of the ASIC Act on a discretionary basis pursuant to s 12GM(2) of the ASIC Act. Section 12GM(5) provides:

An application under subsection (2) may be made at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

83    The respondent submits that for the reasons set out in relation to the TP Act claims, the claim under the ASIC Act should also be dismissed. I agree. There is no power to extend the time to bring that claim. It was “perfected” by the applicant suffering damage, at the latest by October 2005, and indeed probably earlier by the fact of the Judgment and the orders then made. It is out of time. It must be dismissed.

(c) Negligence

84    The applicant alleges that by negligent acts and omissions of the respondent in the performance of its retainer in mid-2005, the applicant suffered loss at least by October 2005.

85    The negligent acts and omissions are alleged to have taken place in South Australia and accordingly the claim in negligence is subject to the Limitation of Actions Act 1936 (SA).

86    Section 35 of the Limitation of Actions Act 1936 (SA) relevantly reads as follows:

35    Actions on simple contract and in tort

The following actions namely:

(a)    actions founded upon any simple contract express or implied, or upon any award where the submission is not by specialty;

…

(c)    actions founded on tort;

…

shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after.

87    The cause of action in negligence also accrues when loss is suffered as a result of the alleged negligence. On the applicant’s allegations, the cause of action for negligence accrued no later than October 2005. It follows that the cause of action for negligence became statute barred under s 35 of the Limitation of Actions Act 1936 (SA) in October 2011.

88    The Court has a discretionary power to extend this limitation period in accordance with s 48 of the Limitation of Actions Act 1936 (SA) if the requirements of that section are met. That provision relevantly reads as follows:

48    General power to extend periods of limitation

(1)    Subject to this section, where an Act, regulation, rule or by-law prescribes or limits the time for –

(a)    instituting an action; or

(b)    doing any act, or taking any step in an action; or

(c)    doing any act or taking any step with a view to instituting an action,

a court may extend the time so prescribed or limited to such an extent, and upon such terms (if any) as the justice of the case may require.

(2)    A court may exercise the powers conferred by this section in respect of any action that –

(a)    the court has jurisdiction to entertain; or

(b)    the court would, if the action were not out of time, have jurisdiction to entertain.

(3)    This section does not –

(a)    apply to criminal proceedings; or

(b)    empower a court to extend a limitation of time prescribed by this Act unless it is satisfied –

(i)    that facts material to the plaintiff’s case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff; or

(ii)    that the plaintiff’s failure to institute the action within the period of the limitation resulted from representations or conduct of the defendant, or a person whom the plaintiff reasonably believed to be acting on behalf of the defendant, and was reasonable in view of those representations or that conduct and any other relevant circumstances,

and that in all the circumstances of the case it is just to grant the extension of time.

(3a)    A fact is not to be regarded as material to the plaintiff’s case for the purposes of subsection (3)(b)(i) unless –

(a)    it forms an essential element of the plaintiff’s cause of action; or

(b)    it would have major significance on an assessment of the plaintiff’s loss.

…

(3b)    In determining whether it is, in all the circumstances of a case, just to grant an extension of time, the court should have regard to –

(a)    the period of extension sought and, in particular, whether the passage of time has prejudiced a fair trial; and

(b)    the desirability of bringing litigation to an end within a reasonable period and thus promoting a more certain basis for the calculation of insurance premiums; and

(c)    the nature and extent of the plaintiff’s loss and the conduct of the parties generally; and

(d)    any other relevant factor.

(4)    Where an extension of time is sought pursuant to this section in respect of the commencement of an action, the action may be instituted in the normal manner, but the process by which it is instituted must be endorsed with a statement to the effect that the plaintiff seeks an extension of time pursuant to this section.

(5)    Proceedings under this section may be determined by the Court at any time before or after the close of pleadings.

(6)    This section does not derogate from any other provision under which a court may extend or abridge time prescribed or limited by an Act, regulation, rule or by-law.

89    It is plain from the material submitted by the applicant that none of the facts alleged by him concerning his claim for an extension of time amount to a fact or an alleged fact which is material to the applicant’s case and which was discovered by him within the 12 months prior to the expiry of the six year limitation period in October 2011, i.e. during the period from October 2010 to October 2011.

90    In his submissions filed on 28 February 2013, the applicant submits that the applicant’s failure to commence these proceedings is the result of the respondent’s failure to make discovery. He also submits that he was not aware of the limitation period.

91    There is nothing to indicate that access to the respondent’s file in the period October 2010 to October 2011 facilitated or enabled the applicant to issue this application where he had previously been unable to do so, or that in that period he learned from such access a material fact of which he was previously unaware. In other words, without forming any view about whether the applicant correctly asserts that the respondent did not give him access to the file at any earlier time, the applicant does not assert (or establish) that in the period October 2010 to October 2011 he learned a material fact from then getting access to the respondent’s file so as to facilitate or enable him to bring this application when he could not previously have done so or could not have done so with the necessary degree of confidence.

92    Indeed, it has been the applicant’s claim even from mid-July 2005 that the respondent was negligent in its conduct of the Supreme Court action on his behalf. His claim then, and now, is based upon an alleged failure to act properly on his instructions. That is a state of affairs, if it is accurate, which he has consistently asserted. None of the matters he refers to in [72] above, derived from his affidavit of 5 September 2012, and none of the matters he has raised in the other documents he has filed, could support a finding that the pre-condition for an extension of time specified in s 48(3)(b)(i) and (3a) is satisfied.

93    In my view, the applicant has also failed to make out any basis for granting an extension of time under s 48(3)(b)(ii) of that Act. It may be understood that the applicant says he did not commence the application earlier by reason of the conduct of the respondent in not providing him with discovery of its file after a request for discovery in 2010, although I do not think he clearly says that. However, it is clear that the absence of such a response did not prevent the applicant commencing this action by reason of that alleged failure. The applicant says that he has to date not received a satisfactory response to the request for discovery in 2010, which he says was in the same terms as his more recent requests for discovery, and he commenced this application without having such a response.

94    The applicant does not explain why the delay occurred in that regard. If he was doubtful about his claim succeeding by reason of a lack of access to documents, he could have made an application for pre-action discovery or, alternatively, have issued these proceedings at an earlier time and sought discovery in the course of the proceedings. That is the course he has now apparently chosen. It was not reasonable in those circumstances to wait until 2010 to request discovery, or to take no other action to secure it, especially as he clearly has had a firm belief in his claim at all times. It is not the case that he hesitated because of difficulty in accessing the respondent’s file. I do not accept that his failure to institute the application earlier, or between October 2010 and October 2011 was for that reason.

95    Even if either s 48(3)(b)(i) or (ii) were matters on which the Court was satisfied, I do not consider that in all the circumstances it would be just to grant to the applicant an extension of time to bring the application. There are several reasons for that conclusion.

96    The first, and most obvious, is that the applicant has not satisfactorily explained the delay. What is apparent from his affidavit is that he has elected to pursue alternative remedies through the “credit ombudsman”, ASIC and through political representatives. He is, of course, entitled to do that. But he does not say that he was unaware of his putative rights to bring his claims against the respondent. He was, on his own acknowledgment, aware of them and intended to pursue them. Whilst the applicant, I accept, could not afford legal representation, that situation has existed apparently since 2005, so it does not explain a lengthy delay. Similarly, whilst his medical condition may explain some delay, it does not explain the lengthy delay particularly as the Supreme Court action was conducted in part in 2005 after his illness, and he was apparently able to give the detailed instructions in relation to it referred to above.

97    Secondly, the fact that the respondent took action against him in 2010 to recover unpaid fees does not justify the applicant in delaying his claim against the respondent. As noted, his claim is a very substantial (and I assume a genuinely expressed) one. It is of such an amount that it is not a justifying factor for his delay in bringing his claim that the respondent, perhaps also somewhat belatedly, brought a claim to recover outstanding fees.

98    Thirdly, the fact that the applicant was told (as he alleges, by the respondent) that he could not make a counterclaim in the Supreme Court action has no weight. In fact, he made a counterclaim in that action for relief against forfeiture. If that is the counterclaim he refers to, it was brought. If he means a counterclaim to sort out precisely how much he owed Pepper, that matter was stood over for further consideration in the Supreme Court action. It appears that the applicant did not seek to pursue it further, or at least he had not given evidence of having done so. If he means some other, more extensive claim, against Pepper, then it is not apparent to me how that claim is expressed or how the respondent was remiss in not pursuing it.

99    Finally, I have had regard to the issues between Pepper and the applicant. I do not think the applicant’s claims as now expressed indicate an understanding of the assumptions which underlie them. One is that he “accepted” the offer put by Pepper on 18 October 2004. He did not; he rejected it. His counter-offer, by his letter of 19 October 2004, if it led to any agreement with Pepper, was on at least the terms of Pepper’s letter of 18 October 2004. That included payment of the insurance funds towards reinstatement of the property, and ultimately discontinuance of Pepper’s action. As the Judgment indicates, there were ongoing disputes between the applicant and Pepper on those questions, and the Master found Pepper did not have to discontinue the Supreme Court action. In addition, the time for repayment of the loan had passed. The applicant’s proposed settlement, as recorded by the respondent (and as conveyed to counsel by the email of 15 July 2005) involved terms which Pepper was very unlikely to have accepted. The applicant does not suggest he changed his instructions, so that his email of 30 July 2005 “to settle the matter” was supposed to mean on any terms possible. The evidence shows Pepper’s position was to await the Judgment before negotiating further. Consequently, whether or not the respondent failed in its contractual or common law duty of care to the applicant, I do not consider the applicant has shown that any failure on its part to put the proposed settlement offer to Pepper either earlier than it did, or at all, would have made any difference to the position of the applicant. The Supreme Court action, on the evidence, would have proceeded to the Judgment. On the material, it is highly unlikely that the proposal of settlement required by the applicant to be put to Pepper (including Pepper paying the applicant’s costs and allowing the applicant to extend the loan until some time in January 2006) would have been accepted.

100    In the light of those considerations, on the present evidence, I would not in any event exercise the discretion to extend the time to bring the claim in favour of the applicant. The interests of justice, in my view, in any event favour bringing an end to the claims against the respondent. It is not necessary, in that circumstance, to address the respective positions of the applicant on the one hand – that the respondent did not give effect to his instructions – and of the respondent on the other hand – that the applicant had failed to pay the requested sums into trust on account of its fees, so it was not obliged to take further action for the applicant. Nor is it necessary to address the competing evidence about the payments made by the applicant to the respondent against the respondent’s claim about the applicant’s failure to make payments he had agreed to make, or was properly required to make. Nor is it necessary to find whether, in other ways asserted by the applicant, the respondent was negligent or in breach of duty either in tort or in contract.

101    I add that the first three considerations referred to would be sufficient for me to reach that conclusion in any event.

(d) Claim for failing to act in the best interests of the applicant

102    The material filed by the applicant does not set out the basis on which damages are claimed for failing to act in his best interests. It must be either a claim for negligence or for breach of contract. A cause of action for breach of contract arises at the time of the breach.

103    As the applicant alleges that the respondent’s retainer was terminated no later than August 2005, any cause of action for breach of contract accrued during or before that month. In any event, the loss pleaded by the applicant arose no later than October 2005 and accordingly any breach of contract which the applicant says is causative of that loss must have occurred during or before that month.

104    Whether the claim is in contract or for negligence, the limitation period expired in October 2011. The claim insofar as it might be based on a contractual obligation for the respondent to act in the best interests of the applicant or on the alleged negligence of the respondent should be dismissed on the basis that it is out of time. The reasons are the same as those discussed in the preceding section of this judgment.

(e) General

105    In reaching those conclusions, I have also taken into account the applicant’s contentions that he was unaware of the relevant time limits. I accept that. His lack of awareness does not routinely lead to the grant of an extension of time. It is in the public interest that claims be brought promptly. That is why a statutory time limit is prescribed, and why the interests of justice sometimes are served by an extension of time being granted. The criteria specified in s 48 indicate when such an extension of time should be granted. For the reasons given, I do not consider the applicant satisfies them.

106    I have addressed the applicant’s submissions concerning the asserted failure of the respondent to give him access to the file as a reason for granting an extension of time. I will not repeat that. He has also raised the lack of access to those documents as a reason for his inability to resist the proceedings against him by the respondent under the Bankruptcy Act 1966 (Cth), apparently to endeavour to recover its costs. It appears the respondent obtained judgment for those costs in the Adelaide Magistrates Court (Minor Civil Division) on 26 February 2006, in the sum of $4578. It was not until 14 April 2010 that the respondent took steps to enforce that judgment. The applicant applied unsuccessfully to that Court to set aside that judgment on 7 July 2010. Subsequently, the applicant sought an order that those costs be taxed in the Supreme Court of South Australia. On 6 July 2011 they were taxed and allowed at $2800 plus the costs of the taxation of $1000. The applicant then applied to have that taxation of costs set aside. That application was also dismissed, although the Court was not then reviewing the entitlement to costs but the amount of the liability for costs: District Court of South Australia Action No 1271-2010: Johnson Lawyers Legal Practice Pty Ltd v Kedem (Judge Lunn, 6 July 2011, unreported). Incidentally, I observe that in that proceeding, the applicant on 28 July 2011 filed and served an extensive affidavit, with exhibits demonstrating his detailed awareness of the respondent’s file, and a further affidavit of 4 July 2011 expressing with some clarity his claims against the respondent to dispute the entitlement to the costs claimed.

107    That material does not support the applicant’s claim that his lack of knowledge about what the respondent’s file reveals is a good reason for his not bringing the present proceeding in a timely way.

108    I do not need to decide whether the failure to raise his present claims against the respondent when the costs judgment in favour of the respondent was entered on 26 February 2006 gives rise to any form of estoppel: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

109    If the timing of this application is prompted by the fact that the applicant is vulnerable to a sequestration order in respect of the costs owed to the respondent, it is the failure to assert his claims at an earlier and proper time – either by an application such as this or by way of defence to the action of the respondent to recover its costs – which is the reason for that circumstance. Vulnerability to a sequestration order is not itself a reason why he could, or should, be granted the extension of time he seeks to pursue his claims for damages for breach of contract or in tort.

CONCLUSION

110    For those reasons, I decide the particular issues referred to above, with the exception of that relating to the jurisdiction of the Court and those concerning estoppel, adversely to the applicant. It follows that the application cannot succeed, and must be dismissed. The applicant should pay to the respondent costs of the application.

Associate:

Dated:    10 May 2013