DORCHESTER FINANCE LIMITED V DELOITTE COA CA57/2011

DORCHESTER FINANCE LIMITED V DELOITTE COA CA57/2011 [5 June 2012]IN THE COURT OF APPEAL OF NEW ZEALANDCA57/2011[2012] NZCA 226BETWEEN DORCHESTER FINANCE LIMITEDAppellantAND DELOITTEFirst RespondentAND PERPETUAL TRUST LIMITEDSecond RespondentHearing: 21 March 2012Court: Harrison, White and Asher JJCounsel: MV Robinson and GK Holm-Hansen for AppellantJQ Wilson and BJ Ward for First RespondentSA Barker and BN White for Second RespondentJudgment: 5 June 2012 at 2.30 pmJUDGMENT OF THE COURTA The appeal is dismissed.B 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 ofprofessional engagement. The clause extinguished the right of the parties to bring anaction for a debt more than one year after the cause of action accrued. The issue iswhether the clause has the substantive effect of extinguishing the debt altogether, oronly 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, wasthe trustee of the appellant Dorchester Finance Ltd's debt securities under a trustdeed of 7 June 1993 (the trust deed). Perpetual became trustee for the holders ofstocks and for depositors who were the beneficiaries. The trust deed contained aterm requiring Dorchester to indemnify Perpetual for all payments reasonablyincurred including expenses for the taking of any expert advice deemed necessary inrelation to any default.1[3] At that time Dorchester, like a number of other financial companies, wassuffering 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 wouldhave implications for beneficiaries. Perpetual as trustee considered the plan anddecided it should obtain an independent assessment. It engaged the accounting andcommercial 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 wassigned by Deloitte and Perpetual as parties on 18 September 2008. Dorchestersigned 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 of12 November 2008. It rendered invoices for professional services to Perpetual on30 September 2008 and 24 November 2008. The invoices totalled $198,628(excluding GST). Perpetual queried the amount of the fees and there were1 Paragraph 6.1.3 of the Trust Deed.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 anindependent consultant, Mr John Waller, for a determination on an appropriate fee.Mr Waller conducted a review and issued a report on 23 August 2010 recommendingthat the fee should be fixed at a reduced figure of $140,000 excluding GST anddisbursements. Deloitte then issued a new invoice on 30 August 2010 for thatrevised sum, and issued a credit note for the sums over and above that figure claimedin the earlier invoices.[7] Perpetual forwarded the revised invoice to Dorchester seeking payment underthe indemnity. Dorchester refused to pay it asserting amongst other objections that itwas out of time. It issued this proceeding seeking declarations including adetermination of the proper construction of the one year limit of action clause. Theproceeding was heard and determined by Venning J.2 One of his decisions was thatthe limit of action clause did not extinguish the debt, and that Perpetual could pay itand seek reimbursement under the indemnity from Dorchester. It is that decisionthat is the subject of this appeal.[8] Other arguments that were raised in the High Court concerning the effect ofMr Waller's report, the effect of there being a revised invoice and the reasonablenessof 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).2 Dorchester Finance Ltd v Deloitte HC Auckland CIV-2010-404-6442, 17 December 2010.The engagement letter incorporated Deloitte's master terms of business and otherterms and conditions.[10] Dorchester signed a "confirmation" at the end of the agreement whichprovided 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; andAgrees that any information obtained by Deloitte in relation to this engagement may be disclosed to Perpetual (and through Perpetual, thesecured 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 December2009, being a year and 20 days after the date of the last invoice, which was renderedon 24 November 2008. In fact Perpetual did not pass the invoices on to Dorchesteruntil a date after that, on 17 December 2009. No action was commenced or requestfor 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 isdisagreement as to its meaning and the consequences in relation to Perpetual's claimfor reimbursement.The High Court decision[12] 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 ofDorchester's arguments in relation to these matters was accepted, and thosedeterminations are not challenged. The Judge considered the limit on action clauseand 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 Budgett4 towhich he had been referred by counsel. He considered that the effect of the clausemust turn on its wording and its construction.5 He distinguished the variousauthorities relied on by Dorchester and concluded that there was no principledreason 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 orextinguish rights.6[13] The Judge observed that Perpetual had the primary obligation to pay Deloitteits fee and noted that a person who incurs a debt is still morally liable to pay thatdebt whether or not they may be entitled to rely on a limitation clause.7 Hedistinguished Dorchester's position from that of a guarantor.8 He also rejected anargument that Perpetual as trustee owed Dorchester as beneficiary a duty to act inDorchester's best interests, noting that Perpetual was not a trustee for Dorchester butfor the holders of the stock and for depositors with Dorchester.9 He concluded thatPerpetual was entitled to pay the Deloitte account and it was entitled to seekreimbursement under the indemnity from Dorchester.10 This finding is the subject ofchallenge 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 partieswhen it cannot be enforced. Once it ceased to be enforceable after the one yearperiod, it ceased to have any effect at all. He argued that the contractual obligationowed by one party and the ability of the other party to enforce it went hand in hand.The question was one of construction.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].[15] As in the High Court Mr Robinson sought to adopt Professor Coote's analysisof the law of exception clauses11 and the authorities relied on by him. He referred tothe distinction between primary and secondary obligations and argued that theprimary obligation to pay the debt was interdependent with the secondary obligationof the right to enforce payment. He placed particular reliance on the judgment ofLord Diplock in Photo Production Ltd v Securicor Transport Ltd12 which hesubmitted supported Professor Coote's analysis.[16] Mr Wilson for Deloitte and Mr Barker for Perpetual both accepted that theissue was one of construction of the contract. But they differed from Mr Robinsonas to the end result of the construction exercise. They sought to distinguish the casesthat were relied on by Mr Robinson as holding that such a limit on action clauseextinguished the substantive right on the expiry of the time. They submitted that theclear meaning of this exception clause was that the one year time limit was only aprocedural bar rather than a substantive termination of the contractual obligation.[17] Messrs Wilson and Barker sought to distinguish the observations of ProfessorCoote. They submitted that if Professor Coote was stating that it was impossible tocreate a time bar by contract that was procedural only, then that analysis did notaccord with the common law as it has developed in England, Australia or NewZealand. They submitted that the meaning of the exception clause was to create onlya 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 mustconsider 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 createan unenforceable contractual duty because that is not in law a contract at all.13Professor Coote proposed that the function of all exception clauses beingsubstantive, was to place substantive limitations upon the rights to which they11 Coote, above n 3.12 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 (HL) at 846.13 At 4–7.apply.14 If a party refuses to accept that there are any obligations for breach of astated obligation, then there is no legal obligation at all.[19] There were, he observed, two types of exception clauses: a Type A exceptionclause, 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 withoutpreventing the accrual of any particular primary right.15 Professor Coote's view wasthat a limitation on time clause, qualifying as it did primary or secondary rights, wasa Type B clause. He observed:16Once the time-limit has expired, the primary rights concerned becomeunenforceable and are extinguished or fulfilled. But, until that time, theysubsist as valid contractual rights. In other words, the exception does notprevent particular primary rights accruing.(footnote omitted)[20] It is important for us to note, however, that the type of limit on action clauseat issue in this appeal is not a clause that cannot be enforced. The contractualobligation is enforceable for the first twelve months. Rather it lays down a timelimit within which the action may be brought. So it is not the type of claim thatcould be said to create no substantive obligation.[21] Professor Coote in the appendix to his book considered limitations as to timeand observed:17The effect of the Limitation Act may in general be procedural, but it wouldappear that when the parties to a contract "provide their own statute oflimitations" the effect is ordinarily substantive.(footnote omitted)He went on to say:18It 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 Dreyfus14 At 7.15 At 9.16 At 11.17 At 154.18 At 155.to be substantive, not procedural: and in Smeaton Hanscomb v Sassoon I Setty, Devlin J did not doubt that such clauses were exception clausesproperly so called.There is doubtless a further category of clauses limiting time; those whichplace a time limit on certain procedural rights without affecting the existenceof substantive rights under the contract. Clauses may exist which place atime limit on a party's rights to go to arbitration, without affecting his claimin law. Such clauses would have no effect except in conjunction with thearbitration clause. They could not, it is submitted, be properly termedexception 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, todetermine whether they support Professor Coote's conclusion and his submissions.[23] In Smeaton Hanscomb,19 a decision of Devlin J in the Queen's BenchDivision, the relevant clause in a shipping contract provided that any claim referredto arbitration had to be made within 14 days from the final discharge of the goodsfrom the ship and before they were removed from the wharf. The question waswhether on the facts found and on the true construction of the contract the buyerswere entitled to maintain any claim against the sellers in the arbitration.20 Thebuyers' argument was that because no objection was made by the sellers to thearbitration 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 partycould not accept appointment of an arbitrator and still argue that the claim was out oftime.22 However, at the end of the judgment he made this brief further statement:23Furthermore, 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 clause19 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.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 propositionthat a clause limiting the time for an action to be brought must have substantiveeffect. However, we are satisfied that the observation was made in the context ofDevlin J resisting an argument that such a limitation clause should be construed so asto affect the authority of an arbitrator or the validity of his appointment. Devlin Jwas putting forward the proposition to support his conclusion that an arbitrator couldrule on an arbitration clause that had the effect of terminating an arbitration. Theright 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 principlethat a limitation of time to bring an action clause must have the invariableconsequence that the debt is extinguished when the time expires. This authority doesnot therefore support Mr Robinson's case.[26] Atlantic Shipping & Trading Co Ltd v Dreyfus & Co24 related to a clause in ashipping 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, onany natural construction, provided for the debt to be extinguished after the time hadexpired. The House of Lords unsurprisingly held that the clause had this substantiveeffect. Lord Sumner, who delivered the leading judgment, considered that the issuewas one of interpretation.25 It was held that in fact the limitation of liability clausedid not apply as the cause of action was founded upon a breach of an impliedcondition rather than an express term.26 We see nothing in that decision to supportthe proposition that a clause limiting time, but not on its words extinguishing theprimary liability, nevertheless has substantive effect.[27] As we have already noted, Mr Robinson placed particular reliance on thejudgment of Lord Diplock in Photo Production Ltd v Securicor Transport Ltd27 andthe analysis the Judge put forward in his decision of the primary and secondaryobligations in a contract. We have been unable to see the relevance of that24 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.distinction to the issue that arises in this case. The House of Lords decision in PhotoProduction Ltd brought to an end the doctrine of fundamental breach. LordWilberforce, who delivered the leading judgment, made it clear that the applicationof any exclusion clause was in the end a matter of construction of the contract.28That proposition is today uncontroversial, and we do not consider that theprimary/secondary obligations distinction assists, or renders any particular assistanceto, Mr Robinson's argument.[28] For the same reasons, the decision of The "Auditor",29 which was referred toby Mr Robinson, is of little assistance to his argument. The clause there expresslystated that when the time expired the "loss or damage shall be deemed to be waivedand the steamer discharged therefrom". This was quite unambiguous wording thatobviously extinguished the debt when the time elapsed, and does not support aproposition that, in the absence of such extinguishing words, the debt is neverthelessat an end.[29] Mr Robinson also placed particular emphasis on the decision of the NewSouth Wales Court of Appeal in Santos Coffee Co Pty Ltd v Direct Freight ExpressPty Ltd,30 which, he argued, adopted Professor Coote's reasoning. The clause therein a contract for the delivery and return of pallets read that no claim "will beaccepted after 90 days". A number of issues of interpretation rose. The Courtstated:31The 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 palletsbeing "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 "palletsowing". 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: BG 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)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].[30] Later the Court said:32The 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 4removes 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 above33 that "[s]uch aclause 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. Thecase turned ultimately on the period for which Santos could claim damages.[31] In our judgment none of the cases supports the proposition relied on byMr Robinson that an exclusion clause limiting the enforceability of a claim after theeffluxion of a period of time cancels the substantive obligation as a matter ofirresistible logic. Whether an exclusion clause applies to a particular fact situationmust, in the end, always be a question of the interpretation of the relevant clause incontext. We discuss later34 that it is quite possible for parties to intend, on anobjective analysis, to limit the time to bring an action to bring a measure of certaintyto 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 categoriseexclusion clauses as substantive or procedural. The approach to interpreting alimitation clause is like any other contractual interpretation exercise. Theinterpretation of the contract involves an inquiry as to what a reasonable andproperly informed third party would consider the parties to mean.35 The overallcommercial context may be relevant.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].[33] Given the premise that an exclusion clause will enable a party to escapeliability for a breach of a contractual promise, it will be assumed that a party will nothave intended to limit liability unless clear and unambiguous language is used.36 ACourt will ordinarily look for clear language or necessary implication beforeconcluding that the right to claim for damages is extinguished. Such an intentionwill not be lightly attributed. The ultimate objective is to ascertain what the partiesintended their words to mean in the particular factual context in which the contractwas made.[34] If Professor Coote was proposing, as Mr Robinson suggests, that as a matterof law, once a time limit to bring an action has expired the primary debt isextinguished, then we must respectfully disagree. Such a proposition would runcounter to the present approach to exclusion clauses, which is to carry out anorthodox contractual interpretation exercise while recognising that parties can beexpected 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 wherethe claim was barred because of a time limit imposed by statute.38 The wording ofthe statutory bar in s 4(1) of the Limitation Act 1950 is similar to the wording of thelimit on action clause in the present case. It provides " the following actions shallnot be brought after the expiration of six years ". It has been accepted that thedebt or other underlying substantive right itself can survive intact past the limitationperiod in such cases.3936 DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 (CA) at 17–18; DairyContainers Ltd v Tasman Orient Line CV [2004] UKPC 22, [2005] 1 NZLR 433 at [12]; i-HealthLtd 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 anddetermine 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 ServicesCompensation 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 Ch161 (Ch).39 Ibid.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 betweenexperienced commercial parties. It can be assumed that a primary object of theclause was to provide a limitation on negligence claims that could be brought againstDeloitte.[37] We are satisfied that on the plain words of the clause41 it does no more thanlimit the time for bringing an action. It does not say that the debt is extinguished, oruse similar words. It does no violence to the words of the clause to restrict them tolimiting the time in which to bring an action, and for the underlying debt to survivethe expiry of the one year limit on action period. So the plain words match theproposed meaning put forward by Deloitte.[38] In contrast, to accept the meaning put forward by Mr Robinson forDorchester involves implying further words into the clause to the effect that "and thedebt is extinguished". As a starting proposition, an interpretation that follows themeaning of the words used and does not involve the implication of others, is morelikely 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 asa set-off. In Derham on the Law of Set-off42 it is stated:A statute of limitation takes away the remedy of enforcing a debt in an actionat 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 wouldbe effected by the bank without recourse to the courts, in which case theexpiration of a limitation period should not affect the right.(footnotes omitted)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].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 thatthe parties would have wanted the underlying debt to be extinguished after the expiryof a year. The situation might well have arisen whereby one party towards the end ofthe one year period sued the other, and the other when it addressed the claim outsidethe 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 forthe services rendered outside the one year period. Or Deloitte might just prior to theexpiry bring a claim for the fee against Perpetual, and Perpetual might wish to claima 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 positionwould 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 intoaccount, it favours an interpretation whereby the debt continues to exist beyond theone year period.[43] We should add that Mr Barker relied on the decision of Budgett v Budgett44where the issue was whether trustees could claim under their right to indemnity forpayments made for debts that were time-barred under the statute of limitations. Itbeing a trustee case, Kekewich J relied on the notion of moral obligation in decidingwhether costs that a trustee had properly incurred were to be included in the costs tobe paid and retained out of capital monies. Kekewich J found that the trustee wasstill morally liable for the debt even though the statutory time period had passed, and43 Spears v Hartly (1800) 3 Esp 81, 170 ER 545 (Comm Pleas); Higgins v Scott (1831) 2 B & Ad413, 109 ER 1196 (KB). See also Australia and New Zealand Banking Group Ltd v DouglasMorris Investments Pty Ltd [1992] 1 QR 478–497 (security for a statute-barred debt).44 Budgett v Budgett, above n 4.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 astatutory limitation period is well established.46 The Budgett decision turned on thetrustee being contractually liable in every sense except that an action could not bebrought outside a certain period because of the statute.47 We do not consider thatidentifying any moral obligation helps in the interpretation exercise. If the partieshave agreed that after a certain time a contractual obligation is extinguished, there isnothing gained by labelling reliance on it as "immoral". If that is what the contractmeans on an objective reading, the parties cannot complain. They agreed to theterm.[45] However, for the reasons given we are satisfied that the words in this clauseand the commercial context do not support reading the plain words to mean that thedebt is extinguished after one year. We agree with Venning J that the words are notdissimilar to those found in statutes of limitation. That is consistent with the barbeing procedural only. We conclude that the debt continued to exist beyond the oneyear 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 astandard appeal on a band A basis together with usual disbursements. We certify fortwo counsel for each respondent.Solicitors:Simpson Grierson, Auckland for AppellantBell Gully, Auckland for First RespondentBuddle Findlay, Wellington for Second Respondent45 At 217–218.46 See Halsbury's Laws of England (5th ed, 2008) vol 68 Limitation Periods at [942]; Philip HPettit 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 andAdministration (10th ed, LexisNexis, Wellington, 2010) at 310.47 At 217.