How a case half in and half out of the limitation period is dealt with

The approach of VCAT’s Legal Practice List to a nice limitations point is illustrated by Wells’s Case, [2006] VCAT 2370 (Senior Member Howell, 16 November 2006), also the subject of this post. What must have been a professional negligence action was commenced just 4 days before the 6th anniversary of the Legal Practitioner ceasing to act for the Client. The limitation period was such that only actions arising in the 6 years before the claim would be within time. The Client said the Legal Practitioner negligently failed to do various things. VCAT decided that only the Legal Practitioner’s conduct during the 4 days during the retainer but within the 6 years before the claim could be enquired into.Section 5 of the Limitation of Actions Act, 1958 says that “actions founded on simple contract (including contract implied in law) or actions founded on tort” must not be “brought after the expiration of six years from the date on which the cause of action accrued”. Professional negligence claims (as opposed to claims under the Fair Trading Act, 1999) are generally brought in tort and contract.

By contrast, pecuniary loss disputes under both the Legal Practice Act, 1996 and Legal Profession Act, 2004 (s. 4.2.7(1)) must be brought within 6 years after the conduct complained about allegedly occurred and there was no power in the Legal Profession Tribunal and there is no power in VCAT to extend the time. “Conduct” is defined to include an act or omission.

Section 159(3) of the Fair Trading Act, 1999 says that a proceeding claiming damages for breach of a provision of the Act (such as the prohibition on misleading or deceptive conduct in the provision of services in trade or commerce or the prohibition on unconscionable conduct) must not be commenced more than 6 years after the cause of action accrued, but that provision does not apply to claims not based on a breach of that Act (such as some “consumer-trader claims” under s. 108 which give VCAT jurisdiction to hear claims by reference to common law so long as they have certain characteristics). Since Mr Howell decided this Fair Trading Act, 1999 case by reference to the Limitation of Actions Act, 1958, it must not have been a claim for breach of the Act.

The accrual of the cause of action in tort is not necessarily on the date of the conduct or the act or omission took place, since some damage might not first occur until some time after the alleged negligence. Some advice might be given, for example, and the client might think about her options for a few days before making the $64,000 decision which turns out to have been affected by the negligent advice. The cause of action in tort accrues on the first sustaining of some loss, which in this example, would be on the making of the decision, or perhaps when that decision had an irrevocable effect.

The distinction must not have been at the heart of this case, since the Legal Practitioners argued that the last date on which an act or omission could have occurred which could have been sued on within time was the last day of their retainer, 4 days short of 6 years before the Client’s application under the Fair Trading Act, 1999, and Senior Member Howell suggested in somewhat loose language which would not otherwise have been appropriate that “An action based upon contract or tort must be commenced within six years after the occurrence of the events that gave rise to the action: Limitation of Actions Act 1958 s.5″. Furthermore, the Legal Practitioners argued that since they did not do anything negligent during the four days — because they were waiting for confirmation of whether the Client wanted them to continue acting — all of their relevant conduct had happened more than 6 years before the proceeding had been commenced, and it was out of time.

It is possible that the unrepresented Client framed her claim exclusively in contract, in which case the cause of action would have accrued at the moment of the allegedly negligent act or omission, rather than when some loss was first suffered as a result as in the case of a negligence claim.

Mr Howell’s reasons for dismissing the application with costs under s. 75 of the VCAT Act, 1998 was:

“11 An action based upon contract or tort must be commenced within six years after the occurrence of the events that gave rise to the action: Limitation of Actions Act 1958 s.5.

12 Ms Wells lodged the present application at VCAT on 26 July 2006, which means that the six year limitation period goes back to 27 July 2000.

13 There is a dispute as to the date upon which Ms Wells terminated the services of [the Legal Practitioner]. Ms Wells contends that the date of termination was 1 August 2000, when she sent a letter to [the Legal Practitioners] terminating its services. [the Legal Practitioner] contends that its services were terminated by Ms Wells in a telephone discussion on 14 July 2000.

14 Even if Ms Wells is correct, to be within the limitation period she could make claims only in respect of events that occurred or failed to occur within the four day period 27 July 2000 to 1 August 2000.

15 Detailed particulars of the claims made by Ms Wells were attached to her application. All of the events referred to in the particulars occurred prior to 27 July 2000. However, some of the claims made by Ms Wells allege failure to take action. Failures of that kind might have continued to run during the four day period but, for the reasons that I am about to give, I am satisfied that [the Legal Practitioner] was not negligent and did not fail to act in accordance with its instructions during the four day period.

16 It is common ground that a telephone discussion took place between Ms Wells and [Mr. G] of [the Legal Practitioner] on 14 July 2000. Ms Wells said today that she informed [Mr. G] during the telephone discussion that she was ‘not really sure’ whether she wanted [the Legal Practitioner] to continue to act on her behalf. [The Legal Practitioner] contended today that its services were terminated by Ms Wells during the telephone discussion. I will assume for present purposes that Ms Wells’ version of the discussion is correct.

17 It is common ground that [the Legal Practitioner] wrote a letter to Ms Wells on 27 July 2000. The letter is ambiguous to a degree, but it refers to the telephone discussion on 14 July 2000, it notes that ‘you have now advised us that you do not wish to have this firm continue to represent you’, and it asks Ms Wells to ‘confirm in writing that we are no longer to proceed to act on your behalf’.

18 I am satisfied, first, that it was reasonable for [the Legal Practitioner] to write to Ms Wells on 27 July 2000 seeking written instructions as to whether it was to cease to act on her behalf and, secondly, to wait four days until 1 August 2000 for a response from Ms Wells. In the light of the telephone discussion of 14 July 2000, [the Legal Practitioner] was not negligent in not taking action on behalf of Ms Wells (if such was the case) during the four days it waited for a response.”

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