Australia: Within the limitation period but abusing the process – A cautionary tale

Last Updated: 12 February 2016
Article by Ann Spencer

The recent decision of Acting Master Gething in Reid International Pty Ltd v Ron Farris Real Estate Pty Ltd [2016] WASC 6 demonstrates that a party who commences an action within the limitation period may still have their claim dismissed as an abuse of process for delays in commencing the action.

The plaintiff, Reid International Pty Ltd (Reid), purchased a commercial premises in South Perth in June 2004 (Property). The Property was advertised for sale with 6 car bays. Reid was unaware, both before and for a considerable time after the sale, that the Property really only came with 4 car bays. The additional two bays belonged to a neighbouring unit. This was discovered in March 2012 when the owner of the neighbouring unit placed 2 disused cars in the bays to prevent Reid from using them.

The defendants to the action were Ron Farris Real Estate Pty Ltd (RFRE), the real estate agent engaged by the vendors to sell the Property, and Christopher Farris, the sales representative for RFRE. Reid commenced proceedings against the defendants on 24 March 2015, alleging that the defendants made misleading and deceptive representations in contravention of the Australian Consumer Law and seeking damages.

The defendants applied to have the action summarily dismissed on the basis that the action was commenced outside of the limitation period, or alternatively, on the basis that the delays between the sale of the Property and the commencement of the action were such that the continuation of the action would amount to an abuse of the process of the court.

Limitation period

The defendants argued that the loss and damage occurred when Reid acquired the Property. On that basis, the defendants said that the 6 year limitation period started running in June 2004, and therefore Reid had commenced the action outside of the limitation period.

Reid argued that the loss and damage was contingent, and only crystallised in March 2012 when the owner of the neighbouring property placed a disused car in each of the two bays. Therefore, it said that the action was commenced within the 6 year limitation period.

In light of the court's general reluctance to resolve limitation issues in interlocutory proceedings, Acting Master Gething did not make any finding in respect of the issue, rather he dismissed the action on the basis that it was an abuse of process.

Abuse of process

The court has the inherent power to dismiss or stay an action notwithstanding that is was regularly commenced and the plaintiff has complied with all applicable rules and orders of the court.

In deciding to dismiss the action on the basis that the delays between the sale of the Property and the commencement of the action were such that the continuation of the action would amount to an abuse of the process of the court, Acting Master Gething considered:

  • the length of the delay;
  • the explanation for the delay;
  • the hardship to the plaintiff if the action was dismissed and the cause of action left statute-barred;
  • the prejudice to the defendant if the action was allowed to proceed notwithstanding the delay; and
  • the conduct of the defendant in the litigation.

Acting Master Gething noted that Reid provided no explanation for the approximate 3 year delay between realising that the Property only came with 4 parking bays and commencing proceedings against the defendants.

In relation to prejudice to the plaintiff, Acting Master Gething noted that even if the action was dismissed, Reid would still be able to pursue the action it had commenced against the owner of the neighbouring unit for a proprietary interest in the parking bays.

In relation to prejudice to the defendants, Acting Master Gething put considerable weight on evidence that the first defendant's files and records related to the sale of the Property had been destroyed, and that the second defendant's ability to recall the events related to the sale of the Property had diminished over time. He considered that, in all the circumstances, it would be oppressive to the defendants to allow the action to be pursued.

There is yet to be a published decision in relation to costs.

Conclusion

A party who discovers at a later time that it may have a cause of action related to a transaction should act to protect its interests as soon as possible. Failure to do so exposes a party to the possibility that the claim will be dismissed, even though the proceedings have been commenced within the relevant limitation period and the plaintiff has complied with all of the rules and directions of the court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Ann Spencer
 
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