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Dorchester Finance Ltd v Deloitte [2012] NZCA 226; [2012] NZCCLR 15 (5 June 2012)

Last Updated: 14 June 2012

JUDGMENT OF THE COURT

A The appeal is dismissed.

2. The appellant is ordered to pay the costs of each of the two respondents for a standard appeal on a band A basis together with usual disbursements. We certify for two counsel for each respondent.

____________________________________________________________________

REASONS OF THE COURT

(Given by Asher J)

Introduction

[1] This appeal concerns the interpretation of a clause in a contract of professional engagement. The clause extinguished the right of the parties to bring an action for a debt more than one year after the cause of action accrued. The issue is whether the clause has the substantive effect of extinguishing the debt altogether, or only the procedural effect of limiting the time to bring an action to the one year.
[2] In 2008 the second respondent Perpetual Trust Ltd, a trustee company, was the trustee of the appellant Dorchester Finance Ltd’s debt securities under a trust deed of 7 June 1993 (the trust deed). Perpetual became trustee for the holders of stocks and for depositors who were the beneficiaries. The trust deed contained a term requiring Dorchester to indemnify Perpetual for all payments reasonably incurred including expenses for the taking of any expert advice deemed necessary in relation to any default.[1]
[3] At that time Dorchester, like a number of other financial companies, was suffering as a consequence of the financial crisis. It was on the brink of receivership, and had taken advice about implementing a deferred repayment plan. This would have implications for beneficiaries. Perpetual as trustee considered the plan and decided it should obtain an independent assessment. It engaged the accounting and commercial partnership of Deloitte to carry out that assessment. Deloitte provides, amongst other things, accounting restructuring and advisory services.
[4] Deloitte drafted an engagement letter relating to the assessment which was signed by Deloitte and Perpetual as parties on 18 September 2008. Dorchester signed a confirmation on the last page in which it agreed to the constraints, limitations and disclaimers.
[5] Deloitte provided a draft report to Perpetual under cover of a letter of 12 November 2008. It rendered invoices for professional services to Perpetual on 30 September 2008 and 24 November 2008. The invoices totalled $198,628 (excluding GST). Perpetual queried the amount of the fees and there were discussions between the parties. These were suspended for 11 months while Deloitte took time to provide additional information. As a consequence Deloitte did not make a claim for payment of the invoices within one year of the due date.
[6] In June 2010 Perpetual and Deloitte referred Deloitte’s invoices to an independent consultant, Mr John Waller, for a determination on an appropriate fee. Mr Waller conducted a review and issued a report on 23 August 2010 recommending that the fee should be fixed at a reduced figure of $140,000 excluding GST and disbursements. Deloitte then issued a new invoice on 30 August 2010 for that revised sum, and issued a credit note for the sums over and above that figure claimed in the earlier invoices.
[7] Perpetual forwarded the revised invoice to Dorchester seeking payment under the indemnity. Dorchester refused to pay it asserting amongst other objections that it was out of time. It issued this proceeding seeking declarations including a determination of the proper construction of the one year limit of action clause. The proceeding was heard and determined by Venning J.[2] One of his decisions was that the limit of action clause did not extinguish the debt, and that Perpetual could pay it and seek reimbursement under the indemnity from Dorchester. It is that decision that is the subject of this appeal.
[8] Other arguments that were raised in the High Court concerning the effect of Mr Waller’s report, the effect of there being a revised invoice and the reasonableness of the Deloitte fee were not ultimately pursued on appeal.

Relevant terms of the letter of engagement

[9] The letter of engagement between Perpetual and Deloitte provided:

No action, regardless of form, arising under or relating to this engagement, may be brought by either party more than one year after the cause of action has accrued, except that an action for non-payment may be brought by a party not later than one year following the date of the last payment due to such party hereunder.

(the limit on action clause).

The engagement letter incorporated Deloitte’s master terms of business and other terms and conditions.

[10] Dorchester signed a “confirmation” at the end of the agreement which provided as follows:

Dorchester Finance Limited (‘Dorchester’):

• Accepts and agrees to the constraints, limitations and disclaimers contained in this engagement letter and the Master Terms of Business;
• Accepts and agrees that clause 9 of the Master Terms of Business that form a part of this engagement letter, which clause limits the liability of Deloitte and any other DTT party, applies to both Dorchester and Perpetual;

In both cases as if Dorchester is also defined as the Client for the purposes of this clause; and

Agrees that any information obtained by Deloitte in relation to this engagement may be disclosed to Perpetual (and through Perpetual, the secured investors) whether or not such disclosure is in Dorchester’s interests.

[11] It is not in contention that the latest date for Deloitte to commence an action to recover the fees owing under the first and second invoices was 14 December 2009, being a year and 20 days after the date of the last invoice, which was rendered on 24 November 2008. In fact Perpetual did not pass the invoices on to Dorchester until a date after that, on 17 December 2009. No action was commenced or request for payment made by Deloitte within the stipulated year of the limit on action clause. It is common ground that the limit on action clause is valid and effective, but there is disagreement as to its meaning and the consequences in relation to Perpetual’s claim for reimbursement.

The High Court decision

3. In his decision Venning J summarised the facts and dealt with arguments relating to the effect of the Waller report and the revised invoices. None of Dorchester’s arguments in relation to these matters was accepted, and those determinations are not challenged. The Judge considered the limit on action clause and how it should be interpreted. He referred to the text by Professor Coote, Exception Clauses,[3] and later the English Chancery decision of Budgett v Budgett[4] to which he had been referred by counsel. He considered that the effect of the clause must turn on its wording and its construction.[5] He distinguished the various authorities relied on by Dorchester and concluded that there was no principled reason to draw a distinction between limitations to sue under statute and contract, noting that the wording under s 4(1) of the Limitation Act 1950 did not destroy or extinguish rights.[6]

[13] The Judge observed that Perpetual had the primary obligation to pay Deloitte its fee and noted that a person who incurs a debt is still morally liable to pay that debt whether or not they may be entitled to rely on a limitation clause.[7] He distinguished Dorchester’s position from that of a guarantor.[8] He also rejected an argument that Perpetual as trustee owed Dorchester as beneficiary a duty to act in Dorchester’s best interests, noting that Perpetual was not a trustee for Dorchester but for the holders of the stock and for depositors with Dorchester.[9] He concluded that Perpetual was entitled to pay the Deloitte account and it was entitled to seek reimbursement under the indemnity from Dorchester.[10] This finding is the subject of challenge in this appeal.

Grounds of appeal

[14] Mr Robinson submitted that it was contrary to the first principles of the law of contract for a contractual obligation to survive an agreement between the parties when it cannot be enforced. Once it ceased to be enforceable after the one year period, it ceased to have any effect at all. He argued that the contractual obligation owed by one party and the ability of the other party to enforce it went hand in hand. The question was one of construction.
[15] As in the High Court Mr Robinson sought to adopt Professor Coote’s analysis of the law of exception clauses[11] and the authorities relied on by him. He referred to the distinction between primary and secondary obligations and argued that the primary obligation to pay the debt was interdependent with the secondary obligation of the right to enforce payment. He placed particular reliance on the judgment of Lord Diplock in Photo Production Ltd v Securicor Transport Ltd[12] which he submitted supported Professor Coote’s analysis.
[16] Mr Wilson for Deloitte and Mr Barker for Perpetual both accepted that the issue was one of construction of the contract. But they differed from Mr Robinson as to the end result of the construction exercise. They sought to distinguish the cases that were relied on by Mr Robinson as holding that such a limit on action clause extinguished the substantive right on the expiry of the time. They submitted that the clear meaning of this exception clause was that the one year time limit was only a procedural bar rather than a substantive termination of the contractual obligation.
[17] Messrs Wilson and Barker sought to distinguish the observations of Professor Coote. They submitted that if Professor Coote was stating that it was impossible to create a time bar by contract that was procedural only, then that analysis did not accord with the common law as it has developed in England, Australia or New Zealand. They submitted that the meaning of the exception clause was to create only a procedural bar stopping an action for enforcement after one year, but no more.

Exception clauses

[18] Given that it formed the centrepiece of Mr Robinson’s submission, we must consider Professor Coote’s text on exception clauses. After reviewing authorities, Professor Coote concluded that it is not in the power of parties to a contract to create an unenforceable contractual duty because that is not in law a contract at all.[13] Professor Coote proposed that the function of all exception clauses being substantive, was to place substantive limitations upon the rights to which they apply.[14] If a party refuses to accept that there are any obligations for breach of a stated obligation, then there is no legal obligation at all.
[19] There were, he observed, two types of exception clauses: a Type A exception clause, the effect of which, if any, is upon the accrual of a particular primary right; and a Type B exception clause, which qualifies primary or secondary rights without preventing the accrual of any particular primary right.[15] Professor Coote’s view was that a limitation on time clause, qualifying as it did primary or secondary rights, was a Type B clause. He observed:[16]

Once the time-limit has expired, the primary rights concerned become unenforceable and are extinguished or fulfilled. But, until that time, they subsist as valid contractual rights. In other words, the exception does not prevent particular primary rights accruing.

(footnote omitted)

[20] It is important for us to note, however, that the type of limit on action clause at issue in this appeal is not a clause that cannot be enforced. The contractual obligation is enforceable for the first twelve months. Rather it lays down a time limit within which the action may be brought. So it is not the type of claim that could be said to create no substantive obligation.
[21] Professor Coote in the appendix to his book considered limitations as to time and observed:[17]

The effect of the Limitation Act may in general be procedural, but it would appear that when the parties to a contract “provide their own statute of limitations” the effect is ordinarily substantive.

(footnote omitted)

He went on to say:[18]

It may be mentioned that contractual limitations as to time on rights of recovery were held by the House of Lords in Atlantic Shipping Co v Dreyfus to be substantive, not procedural: and in Smeaton Hanscomb v Sassoon I Setty, Devlin J did not doubt that such clauses were exception clauses properly so called.

There is doubtless a further category of clauses limiting time; those which place a time limit on certain procedural rights without affecting the existence of substantive rights under the contract. Clauses may exist which place a time limit on a party’s rights to go to arbitration, without affecting his claim in law. Such clauses would have no effect except in conjunction with the arbitration clause. They could not, it is submitted, be properly termed exception clauses.

(footnotes omitted)

[22] Mr Robinson placed reliance on the cases referred to by Professor Coote. It is important for us to consider them, and the other authorities he put forward, to determine whether they support Professor Coote’s conclusion and his submissions.
[23] In Smeaton Hanscomb,[19] a decision of Devlin J in the Queen’s Bench Division, the relevant clause in a shipping contract provided that any claim referred to arbitration had to be made within 14 days from the final discharge of the goods from the ship and before they were removed from the wharf. The question was whether on the facts found and on the true construction of the contract the buyers were entitled to maintain any claim against the sellers in the arbitration.[20] The buyers’ argument was that because no objection was made by the sellers to the arbitration proceedings at the outset and they allowed the arbitration to continue, they lost their ability to claim the benefit of the limitation clause. There was “nothing left in the clause”.[21]
[24] Devlin J did not accept that argument. He could see no reason why a party could not accept appointment of an arbitrator and still argue that the claim was out of time.[22] However, at the end of the judgment he made this brief further statement:[23]

Furthermore, if I have to choose between construing a clause which provides that any claim must be made within 14 days either as a clause that bars the claim altogether or as a clause that goes to the jurisdiction of the arbitrator, I should choose the former; for I can see no reason for holding that a clause which is in form a limitation clause should be construed so as to affect the authority of an arbitrator or the validity of his appointment.

[25] Mr Robinson relied heavily on this statement as supporting the proposition that a clause limiting the time for an action to be brought must have substantive effect. However, we are satisfied that the observation was made in the context of Devlin J resisting an argument that such a limitation clause should be construed so as to affect the authority of an arbitrator or the validity of his appointment. Devlin J was putting forward the proposition to support his conclusion that an arbitrator could rule on an arbitration clause that had the effect of terminating an arbitration. The right to rely on the limitation clause was not lost by the arbitration taking place. Devlin J was not, in our view, putting forward any general proposition of principle that a limitation of time to bring an action clause must have the invariable consequence that the debt is extinguished when the time expires. This authority does not therefore support Mr Robinson’s case.
[26] Atlantic Shipping & Trading Co Ltd v Dreyfus & Co[24] related to a clause in a shipping charter that provided that if a claim was not made within the appointed time “... the claim shall be deemed to be waived and absolutely barred”. The words, on any natural construction, provided for the debt to be extinguished after the time had expired. The House of Lords unsurprisingly held that the clause had this substantive effect. Lord Sumner, who delivered the leading judgment, considered that the issue was one of interpretation.[25] It was held that in fact the limitation of liability clause did not apply as the cause of action was founded upon a breach of an implied condition rather than an express term.[26] We see nothing in that decision to support the proposition that a clause limiting time, but not on its words extinguishing the primary liability, nevertheless has substantive effect.
[27] As we have already noted, Mr Robinson placed particular reliance on the judgment of Lord Diplock in Photo Production Ltd v Securicor Transport Ltd[27] and the analysis the Judge put forward in his decision of the primary and secondary obligations in a contract. We have been unable to see the relevance of that distinction to the issue that arises in this case. The House of Lords decision in Photo Production Ltd brought to an end the doctrine of fundamental breach. Lord Wilberforce, who delivered the leading judgment, made it clear that the application of any exclusion clause was in the end a matter of construction of the contract.[28] That proposition is today uncontroversial, and we do not consider that the primary/secondary obligations distinction assists, or renders any particular assistance to, Mr Robinson’s argument.
[28] For the same reasons, the decision of The “Auditor”,[29] which was referred to by Mr Robinson, is of little assistance to his argument. The clause there expressly stated that when the time expired the “loss or damage shall be deemed to be waived and the steamer discharged therefrom”. This was quite unambiguous wording that obviously extinguished the debt when the time elapsed, and does not support a proposition that, in the absence of such extinguishing words, the debt is nevertheless at an end.
[29] Mr Robinson also placed particular emphasis on the decision of the New South Wales Court of Appeal in Santos Coffee Co Pty Ltd v Direct Freight Express Pty Ltd,[30] which, he argued, adopted Professor Coote’s reasoning. The clause there in a contract for the delivery and return of pallets read that no claim “will be accepted after 90 days”. A number of issues of interpretation rose. The Court stated:[31]

The third issue as to the meaning of clause 4, and closely related to the second, is whether the clause extinguished the underlying fact of the pallets being “owed” or whether it only contractually barred a remedy by claim. In the simple contractual framework of the second contract such a distinction may be seen to be overly refined and legalistic. The reality is that the parties agreed that after 90 days no claim could be made for so-called “pallets owing”. Such a clause bars the claim altogether: Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 1 WLR 1468 at 1472, and can be seen to have a substantive operation: destroying or extinguishing liability: B G Coote Exception Clauses (1964 Sweet & Maxwell) at 11 and 154-155; Atlantic Shipping & Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250 at 258 (Lord Dunedin), 259 and 261-262 (Lord Sumner); The ‘Auditor’ (1924) 18 Lloyd’s List Law Rep 402 and 464 at 465.

(emphasis added)

[30] Later the Court said:[32]

The barring of the claim by cl 4 is the equivalent of a statute bar. In Atlantic Shipping v Dreyfus at 261 Lord Sumner said that the parties to the contract “provided their own statute of limitations”. To all intents and purposes cl 4 removes Direct’s legal responsibility to return the earlier overdue pallets. Any such liability is extinguished. That Direct nevertheless intended to return them can be accepted, but the operation of cl 4 can be seen either to destroy the earlier obligation or at least to change its character to one that was not enforceable.

(emphasis added)

This last statement indicates that the earlier references quoted above[33] that “[s]uch a clause bars the claim altogether” and “can be seen to have a substantive operation” were no more than propositions rather than affirmative statements of the law. The case turned ultimately on the period for which Santos could claim damages.

[31] In our judgment none of the cases supports the proposition relied on by Mr Robinson that an exclusion clause limiting the enforceability of a claim after the effluxion of a period of time cancels the substantive obligation as a matter of irresistible logic. Whether an exclusion clause applies to a particular fact situation must, in the end, always be a question of the interpretation of the relevant clause in context. We discuss later[34] that it is quite possible for parties to intend, on an objective analysis, to limit the time to bring an action to bring a measure of certainty to their exposure, but to nevertheless leave the substantive obligation alive.
[32] In the end we do not consider it is of assistance to try and categorise exclusion clauses as substantive or procedural. The approach to interpreting a limitation clause is like any other contractual interpretation exercise. The interpretation of the contract involves an inquiry as to what a reasonable and properly informed third party would consider the parties to mean.[35] The overall commercial context may be relevant.
[33] Given the premise that an exclusion clause will enable a party to escape liability for a breach of a contractual promise, it will be assumed that a party will not have intended to limit liability unless clear and unambiguous language is used.[36] A Court will ordinarily look for clear language or necessary implication before concluding that the right to claim for damages is extinguished. Such an intention will not be lightly attributed. The ultimate objective is to ascertain what the parties intended their words to mean in the particular factual context in which the contract was made.
[34] If Professor Coote was proposing, as Mr Robinson suggests, that as a matter of law, once a time limit to bring an action has expired the primary debt is extinguished, then we must respectfully disagree. Such a proposition would run counter to the present approach to exclusion clauses, which is to carry out an orthodox contractual interpretation exercise while recognising that parties can be expected to use clear and unambiguous language to exclude or limit liability.[37]
[35] We should add that we were referred by counsel to a number of cases where the claim was barred because of a time limit imposed by statute.[38] The wording of the statutory bar in s 4(1) of the Limitation Act 1950 is similar to the wording of the limit on action clause in the present case. It provides “... the following actions shall not be brought after the expiration of six years ...”. It has been accepted that the debt or other underlying substantive right itself can survive intact past the limitation period in such cases.[39]

This clause

[36] A contractual time bar can operate to provide the parties’ “own statute of limitations” to use the words of Lord Sumner in Atlantic Shipping.[40] It is necessary to consider the factual context of this limitation of time provision. It arose between experienced commercial parties. It can be assumed that a primary object of the clause was to provide a limitation on negligence claims that could be brought against Deloitte.
[37] We are satisfied that on the plain words of the clause[41] it does no more than limit the time for bringing an action. It does not say that the debt is extinguished, or use similar words. It does no violence to the words of the clause to restrict them to limiting the time in which to bring an action, and for the underlying debt to survive the expiry of the one year limit on action period. So the plain words match the proposed meaning put forward by Deloitte.
[38] In contrast, to accept the meaning put forward by Mr Robinson for Dorchester involves implying further words into the clause to the effect that “and the debt is extinguished”. As a starting proposition, an interpretation that follows the meaning of the words used and does not involve the implication of others, is more likely to be the correct interpretation.
[39] As Mr Wilson submitted, it is settled that where a statute of limitation takes away the remedy of enforcing a debt in an action at law, the debt can still operate as a set-off. In Derham on the Law of Set-off[42] it is stated:

A statute of limitation takes away the remedy of enforcing a debt in an action at law but commonly leaves the debt itself intact. Assume that combination [of accounts by a bank] indeed operates by way of set-off. The set-off would be effected by the bank without recourse to the courts, in which case the expiration of a limitation period should not affect the right.

(footnotes omitted)

Similarly the common law has recognised that a possessory lien may be exercised in respect of a statute barred debt.[43]

[40] In our judgment, if the commercial context is considered, it is unlikely that the parties would have wanted the underlying debt to be extinguished after the expiry of a year. The situation might well have arisen whereby one party towards the end of the one year period sued the other, and the other when it addressed the claim outside the one year period, wished to raise a debt under the contract as a set-off.
[41] Therefore, in this case Perpetual might have brought a claim against Deloitte for negligence just prior to the expiry of the one year period, leaving Deloitte in a position where it would wish to set-off against that claim the unpaid debt due to it for the services rendered outside the one year period. Or Deloitte might just prior to the expiry bring a claim for the fee against Perpetual, and Perpetual might wish to claim a set-off for an act of alleged negligence by Deloitte.
[42] It can be assumed that either party being sued in this context would have the reasonable expectation of being able to set-off its cross-claim. Any other position would be unfair, leaving one party with a remedy and the other without a remedy. The bargain would not be equal. When this broad commercial context is taken into account, it favours an interpretation whereby the debt continues to exist beyond the one year period.
[43] We should add that Mr Barker relied on the decision of Budgett v Budgett[44] where the issue was whether trustees could claim under their right to indemnity for payments made for debts that were time-barred under the statute of limitations. It being a trustee case, Kekewich J relied on the notion of moral obligation in deciding whether costs that a trustee had properly incurred were to be included in the costs to be paid and retained out of capital monies. Kekewich J found that the trustee was still morally liable for the debt even though the statutory time period had passed, and was entitled to be indemnified for payment of such a debt.[45] Venning J in his decision in the present case referred to moral liability still being a relevant factor.
[44] The proposition that a trustee can be indemnified for a debt paid outside a statutory limitation period is well established.[46] The Budgett decision turned on the trustee being contractually liable in every sense except that an action could not be brought outside a certain period because of the statute.[47] We do not consider that identifying any moral obligation helps in the interpretation exercise. If the parties have agreed that after a certain time a contractual obligation is extinguished, there is nothing gained by labelling reliance on it as “immoral”. If that is what the contract means on an objective reading, the parties cannot complain. They agreed to the term.
[45] However, for the reasons given we are satisfied that the words in this clause and the commercial context do not support reading the plain words to mean that the debt is extinguished after one year. We agree with Venning J that the words are not dissimilar to those found in statutes of limitation. That is consistent with the bar being procedural only. We conclude that the debt continued to exist beyond the one year period, even though no action could be brought.

Result

[46] The appeal is dismissed.
[47] The appellant is ordered to pay the costs of each of the two respondents for a standard appeal on a band A basis together with usual disbursements. We certify for two counsel for each respondent.

Solicitors:
Simpson Grierson, Auckland for Appellant
Bell Gully, Auckland for First Respondent
Buddle Findlay, Wellington for Second Respondent

[1] Paragraph 6.1.3 of the Trust Deed.
[2] Dorchester Finance Ltd v Deloitte HC Auckland CIV-2010-404-6442, 17 December 2010.

3. [3] Brian Coote Exception Clauses: Some aspects of the law relating to exception clauses in contracts for the carriage, bailment and sale of goods (Sweet & Maxwell, Wellington, 1964).

[4] Budgett v Budgett [1895] 1 Ch 202 (Ch).
[5] At [31].
[6] At [42]–[43].
[7] At [50].
[8] At [51].
[9] At [58].
[10] At [59].
[11] Coote, above n 3.
[12] Photo Production Ltd v Securicor Transport Ltd [1980] UKHL 2; [1980] AC 827 (HL) at 846.
[13] At 4–7.
[14] At 7.
[15] At 9.
[16] At 11.
[17] At 154.
[18] At 155.
[19] Smeaton Hanscomb & Co Ltd v Sassoon I Setty Son & Co [1953] 1 WLR 1468 (QB).
[20] At 1469.
[21] At 1471.
[22] At 1471.
[23] At 1472.
[24] Atlantic Shipping & Trading Co Ltd v Dreyfus & Co [1922] 2 AC 250 (HL).
[25] At 258.
[26] At 257 and 261.
[27] Photo Production Ltd v Securicor Transport Ltd, above n 12, at 846.
[28] At 841–843, 848–851 and 853.
[29] The “Auditor” (1924) 18 Lloyd’s Rep 402 and 464.
[30] Santos Coffee Co Pty Ltd v Direct Freight Express Pty Ltd [2010] NSWCA 14.
[31] At [17].
[32] At [43].
[33] At [29].
[34] See [40]–[43].

[35] Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [4]–[5], [19]–[21], [61]–[64], [119] and [151].

[36] DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 (CA) at 17–18; Dairy Containers Ltd v Tasman Orient Line CV [2004] UKPC 22, [2005] 1 NZLR 433 at [12]; i-Health Ltd v iSoft NZ Ltd [2011] NZCA 575, [2012] 1 NZLR 379 at [43]–[45].

[37] Given the clear view we have reached on this it is not necessary for us to go further and determine whether Professor Coote’s thesis went as far as Mr Robinson suggests.

[38] For example Yew Bon Tew v Kenderaan Bas Mara [1983] 1 AC 553 (PC); Financial Services Compensation Scheme Ltd v Larnell (Insurances) Ltd (in liq) [2005] EWCA Civ 1408, [2006] QB 808; Budgett v Budgett, above n 4; and London and Midland Bank v Mitchell [1899] 2 Ch 161 (Ch).

[39] Ibid.
[40] At 261.
[41] See [9] above.

[42] Rory Derham Derham on the Law of Set-off (4th ed, Oxford University Press, New York, 2010) at [15.39].

[43] Spears v Hartly (1800) 3 Esp 81, 170 ER 545 (Comm Pleas); Higgins v Scott [1831] EngR 106; (1831) 2 B & Ad 413, 109 ER 1196 (KB). See also Australia and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 QR 478–497 (security for a statute-barred debt).
[44] Budgett v Budgett, above n 4.
[45] At 217–218.

[46] See Halsbury’s Laws of England (5th ed, 2008) vol 68 Limitation Periods at [942]; Philip H Pettit Equity and the Law of Trusts (11th ed, Oxford University Press, New York, 2009) at 479; Noel C Kelly, Chris Kelly and Greg Kelly Garrow and Kelly Law of Trusts and Trustees (6th ed, LexisNexis, Wellington, 2005) at [24.7]; and Dr N Richardson Nevill’s Law of Trusts, Wills and Administration (10th ed, LexisNexis, Wellington, 2010) at 310.
[47] At 217.