Executor Trustee & Agency Company of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162 (3 October 1919)

The Executor, Trustee and Agency Company of South Australia Limited Defendant, Appellant; and Thompson Plaintiff, Respondent.

The respondent sued the appellant Company, the executor of Edward Saint deceased, for debt (1) upon a balance of money due for goods sold and delivered by the respondent to the deceased and for interest, (2) for money found to be due upon a balance of account and upon an account stated.

The summons was issued in the Local Court on 12th November 1918. The defendant pleaded the Statute of Limitations, and upon the evidence contended that the Statute began to run at the latest in June 1912, and had therefore barred the claim before the issue of the summons.

The evidence is sufficiently stated in the judgment appealed from [the passage referred to is set out above], but it will tend to clearness if I refer, without quoting them, to two passages, one from the evidence of William Robert Thompson, a son of the plaintiff, and the other from the evidence of the plaintiff himself [the passages are set out above].

Before the events of June 1912 Saint had never agreed to pay interest on his account for the goods sold and delivered previously to that time. The evidence is that in that month the plaintiff, having up to then charged the deceased with £134 17s. 6d. for interest, proposed to him that if he would pay that sum, and with it the sum previously owing for goods, £106 3s. 6d., that is, if he would pay the total sum of £241 1s., he, the plaintiff, would give him time until 1st January 1913 to make the payment, and that the deceased agreed. Obviously, upon the making of this arrangement the plaintiff could not sue Saint upon it at any time between its date in June 1912 and 1st January 1913. For the arrangement superseded the old debt by a new promise of the deceased, the new consideration coming from the plaintiff in the shape of the promise to give the specified time. I agree with the learned Chief Justice that it makes no difference whether the proposal came from one party or the other. The resulting contract would be exactly the same. If this was an agreement legally binding upon Saint, it still could not be the subject of a breach affording a cause of action until 1st January 1913, and the action could not be barred until the end of 1918. Therefore, if Saint was legally bound by the new agreement, the action upon it against Saint's executor, the appellant, was begun in time.

Then, does the evidence, if accepted, show an agreement binding upon Saint; and is the defendant therefore, in that event, liable for what would be an undeniable breach?

Secs. 36 and 43 of the Limitation of Suits and Actions Act 1866 S.A. have been sufficiently stated in the judgment appealed from. I agree completely with the Supreme Court in the deduction which they have drawn from the cases of Jones v. Ryder[1] and Hopkins v. Logan[2], "that the plaintiff may rely on an agreement which is not in writing to take the debt out of the provisions of the Statute if he can show that it was made upon a fresh consideration... The Statute applies independently to that agreement, and time begins to run from the breach" of it, namely, in this case 1st January 1913.

If, then, the evidence for the plaintiff is believed, and in the absence of successful rebuttal, his case is established.

The Local Court having granted a nonsuit, it was set aside by the Supreme Court and the case sent back to the Local Court for rehearing. I am of opinion that their Honors of the Supreme Court were right in making that order.

There are two causes of action sued upon: the first is the price of goods sold and delivered with interest, and the second for the amount of an account stated with interest. The only defence with which this appeal is concerned is the Limitation of Suits and Actions Act 1866 (30 Vict. No. 14), sec. 43 of which is almost the same as the enacting part of sec. 1 of Lord Tenterden's Act (9 Geo. IV., c. 14). The two enactments are not absolutely identical, but for the present purpose may be regarded as identical.

The question we have to consider turns, as I think, upon whether there was evidence before the Local Court upon which that tribunal could reasonably find (1) that in June 1912 Thompson and Saint came to an agreement for valuable consideration in respect of the goods delivered and interest, and (2) that that agreement superseded their previously existing obligations in respect of those matters. If those questions are answered in the negative, then the nonsuit was right, and should be restored.

I agree with Mr. Cleland's argument that the mere fact that there was a new contract for valuable consideration whereby Thompson bound himself not to sue until January 1913, would not entitle the respondent to succeed. In East India Co. v. Oditchurn Paul[3] the Privy Council say: "There might be an agreement that in consideration of an inquiry into the merits of a disputed claim, advantage should not be taken of the Statute of Limitations in respect of the time employed in the inquiry, and an action might be brought for breach of such an agreement; but if to an action for the original cause of action the Statute of Limitations is pleaded, upon which issue is joined—proof being given that the action did clearly accrue more than six years before the commencement of the suit—the defendant, notwithstanding any agreement to inquire, is entitled to the verdict." On the other hand, if the double proposition stated be answered in the affirmative, then, in my opinion, the appeal should be dismissed, and the case go for rehearing as directed in order that the Local Court should come to its own conclusion on the matter. Mr. Cleland's argument went so far as to contend that no oral agreement of any nature could prevent the operation of the Statute. That argument went too far.

As to the claim for the price of goods sold and delivered and interest thereon, that is, "the original cause of action," I agree with him that no oral agreement, however founded on valuable consideration, could avoid the Statute, and the authority has been already stated. And I agree for this reason: that the Statute says that the oral agreement shall not be deemed sufficient evidence of a new or continuing contract whereby to take the case out of the operation of the Statute. It being a matter of evidence only, the same result must follow whether there is consideration or not, but the question is of what contract or obligation is it tendered in evidence. If it is the original cause of action, the contention is perfect, because then the account stated is only a new agreement that the old claim is well founded. Therefore, as to the claim for goods sold and delivered, the respondent must fail. But the second claim—account stated—taken on its own footing may be different. Lord Tenterden's Act made no change in the law except to require written evidence signed by the debtor himself (Haydon v. Williams[4]). In South Australia an agent may sign; the necessity for written evidence is, however, the same. But the point to be observed for the purpose in hand is as above stated, and is clearly demonstrated by Wigram V.C. in Philips v. Philips[5]. The legal effect of the acknowledgment of a debt barred by the Statute is a promise to pay the old debt, and for this purpose the old debt is a consideration in law. And it may be repeated that the Act, in requiring a written acknowledgment or promise, is dealing with a claim for the old debt.

Now, an account stated is a distinct cause of action. This was very pointedly decided by the Court of Appeal in Grundy v. Townsend[6], where it was held that the admission of a debt made in the City of London gave, on acceptance by suit, jurisdiction to the Mayor's Court, when the original obligation was outside that jurisdiction. And, because it is a distinct cause of action, Mr. Parsons contended that that was sufficient to oust the Statute. But I cannot go so far as that. An account stated may be a mere admission of a debt, merely evidence of it, to which, in the circumstances, the law attaches a promise to pay. In such a case the obligation as to the old debt remains unaltered, and the account stated, though a new ground of action, is not conclusive or exclusive (Fidgett v. Penny[7] and Perry v. Attwood[8]). And then the Statute of Limitations applies, as it does here to the first claim made even though the account, if stated, was for valuable consideration, provided it was a mere promise to pay the old debt at a future time. But an account stated may be something quite different. It may, as Lord Blackburn (when Blackburn J.) said in Laycock v. Pickles[9], be "a real account stated, called in old law an insimul computassent, that is to say, when several items of claim are brought into account on either side, and, being set against one another, a balance is struck, and the consideration for the payment of the balance is the discharge of the items on each side. It is then the same as if each item was paid and a discharge given for each, and in consideration of that discharge the balance was agreed to be due." Now, no doubt, he says it is as if payment had been made, but the point is that the constructive payment is referred to only as the reason for the constructive discharge; and then it is in consideration of the discharge that the new balance is agreed to be paid. That balance supported by new valuable consideration is a new obligation, entirely superseding the old. To use the language of Rolfe B. in Ashby v. James[10], "it is a transaction between the parties, out of which a new consideration arises for a promise to pay the balance." And it is not what Alderson B., in the same case, calls "a mere parol statement of, and promise to pay, an existing debt" which, as he observes, would not take the case out of the Statute "because to hold otherwise would be to repeal the Statute." Now, if that be the principle, it has to be seen whether the interview of June 1912 was merely—even though for valuable consideration—an arrangement to admit an existing debt, coupled with a binding agreement to give time to pay it until January 1913, or was a bargain for valuable consideration to place everything on a new footing, to supersede the old debt entirely and to create a new obligation, namely, to pay the price of goods already delivered taken as at the entered amounts, and interest as claimed, the period of payment of this new debt being fixed at January 1913. In that case it would resemble in principle the case of Helps v. Winterbottom[11]. In the first alternative, the plaintiff fails because the evidence is inadmissible or insufficient in law; in the second the plaintiff succeeds, so far as the Statute is concerned, because the bargain, though oral, is not offered as evidence of the original cause of action to which alone the Statute applied, but to a cause of action not only new but entirely independent, the former one having ceased to exist. Which of these two alternatives should prevail it is, of course, beyond my province to say or even suggest. I can only say that on the evidence before us it is not legally impossible to find either: whichever on the new evidence to be given appears the more probable and more reasonable will be for the tribunal of fact to determine for itself. Our duty is simply to say that it is on present materials open to adopt either, and therefore the nonsuit was wrong and the appeal should be dismissed.

I agree in thinking that the judgment appealed against is right, and that the appeal must be dismissed.

I agree that on the facts before us it is competent for the Local Court to hold, if they think fit—as to which I express no opinion,—that by a new agreement for valuable consideration a new obligation was substituted for the old debt, the new obligation being to pay on 1st January 1913 the agreed amount for goods and interest to date.

[1] [1838] EngR 149; 4 M. & W., 32.

[2] [1839] EngR 120; 5 M. & W., 241.

[3] [1849] EngR 1151; 7 Moo. P.C.C., 85, at p. 112.

[4] [1830] EngR 866; 7 Bing., 163.

[5] [1844] EngR 564; 3 Ha., 281, at p. 300.

[6] 36 W.R., 531.

[7] 1 C. M. & R., 108.

[8] [1856] EngR 597; 6 El. & Bl., 691.

[9] [1863] EngR 944; 4 B. & S., 497, at p. 506.

[10] [1843] EngR 652; 11 M. & W., 542, at p. 544.

[11] [1831] EngR 101; 2 B. & Ad., 431.

High Court of Australia

Executor Trustee & Agency Company of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162 (3 October 1919)

HIGH COURT OF AUSTRALIA