NATIONAL PACIFIC COMMERCIAL EQUITIES LTD V C B RICHARD ELLIS LIMITED HC AK CIV-2007-404-5832

NATIONAL PACIFIC COMMERCIAL EQUITIES LTD V C B RICHARD ELLIS LIMITED HC AK CIV- 2007-404-5832 7 February 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2007-404-5832BETWEEN NATIONAL PACIFIC COMMERCIAL EQUITIES LIMITED FORMERLY KNOWN AS HIGHWELL INVESTMENT GROUP LIMITED Plaintiff AND C B RICHARD ELLIS LIMITED Defendant Hearing: 18 December 2007 Appearances: Mr Akel for plaintiff Mr D Mclellan for defendant Judgment: 7 February 2008 at 9.30 a.m.JUDGMENT OF ASSOCIATE JUDGE DOOGUEThis judgment was delivered by me on07.02.08 at 9.30 a.m, pursuant to Rule 540(4) of the High Court Rules. Registrar/Deputy Registrar DateCounsel:Simpson Grierson, Private Bag 92518, Wellesley Street, Auckland Daniel McLellan, Shortland Chambers, P O Box 4338, AucklandBackground[1] National Pacific Commercial Equities Ltd ("National Pacific") alleges that CB Richard Ellis Ltd ("CBRE") negligently prepared a valuation report on an apartment in a building in Quay Street, Auckland and that National Pacific bought the property in reliance on the valuation. It claims damages of not less than $1 million calculated as the difference between the true market value of the property and CBRE's valuation. [2] National Pacific entered into an agreement to purchase the property on 1 March 2000 subject to conditions. The agreement subsequently became unconditional and on 3 May 2000 National Pacific settled the purchase of the property. [3] The defendant has filed an application to dismiss the proceeding as an abuse of process because it says that National Pacific's cause of action accrued on 3 May 2000 when it became contractually committed to the purchase of the property and as a result it suffered loss on that date. Accordingly, the defendant says, the limitation period expired on 3 May 2006. The proceeding was issued in September 2007.[4] National Pacific's statement of claim alleges that it was introduced to the Quay Street property and its then owner, Wilfred Johnson, in February 2000. Less than a year before - in May 1999 - a company controlled by Johnson had bought the property for $1.1 million and, apparently contemporaneously, sold the property to another Johnson controlled company for $2.65 million. It is alleged in the statement of claim that the defendant prepared a valuation of the property. The statement of claim asserts that the valuation was "prepared for and provided to a mortgage broker called Property Pack Commercial Limited" and valued the property as at 29 October 1999 at $2.6 million. The report stated that the purpose of the valuation was "current market value for finance purposes". [5] The statement of claim alleges that Johnson gave the report to a director of National Pacific and:in reliance on the CB Richard Ellis valuation of the property at $2.6 million, on or about 1 March 2000 [National Pacific] entered into an agreement to purchase the property from Johnson Family Trust Limited for $2.7 million.[6] The statement of claim further alleges that Johnson entered into a "lease back and buy back Agreement" with National Pacific under which Johnson would rent the property and buy it back within 3 years of settlement for a price between $2.6 million and $2.8 million (depending on the year of purchase). This was an incentive to National Pacific buying the property. It is alleged that National Pacific then obtained finance from ASB Bank and Bridgecorp through the mortgage broker, Property Pack Commercial Limited, and that CBRE's valuation was used for this purpose and the valuation report was readdressed to the finance companies. [7] National Pacific alleges that "in reliance on the CB Richard Ellis valuation", it:(1) obtained first and second mortgage finance from ASB Bank and Bridgecorp respectively totalling $1,690,000; and (2) settled the purchase of the property from Johnson on 3 May 2000.[8] The statement of claim also says that after settlement Johnson made no rental payments which resulted in National Pacific being unable to make mortgage payments and that in June 2001 ASB Bank made demand under its mortgage and in November 2001 it sold the property by mortgagee sale for $1,155,000. [9] National Pacific raises various allegations of negligence against CBRE. All are connected with the preparation and contents of the valuation report. Specifically, National Pacific asserts that if the valuation had been accurate it would not have:1. Purchased the property for $2.7 million; 2. Raised mortgage finance; 3. Contributed equity capital to the purchase; 4. Settled the purchase; 5. Defaulted under the mortgage because of Johnson's failure to make lease payments or buy back the property.[10] National Pacific alleges that it is entitled to damages of not less than $1 million being:1. The difference between the CBRE valuation and the true market value; 2. Its equity contribution; 3. Unspecified loss as a result of the mortgagee sale.[11] National Pacific contends that its cause of action did not accrue until the property was sold by mortgagee sale in November 2001 because that is when it suffered loss. It also alleges in its notice of opposition that it did not know nor could reasonably have known of CBRE's negligence until the loss occurred in November 2001. In his submissions, Mr Akel for National Pacific said:13.THE defendant contends that the law is so clear cut that the claim should be struck out. In particular the defendant relies on the House of Lords decision in Nykredit plc v Edward Erdman Ltd [1997] 1WLR 1627.14. [NATIONAL PACIFIC'S] response is:a) The strike out jurisdiction is to be sparingly exercised. b) The law is not so clear cut to strike out the claim. c) The claim is not so clearly untenable that it cannot succeed. d) As with other areas of the law, context is everything on limitation points.Davys Burton v Campbell Robert Thom [2007] NZCA 215 at paragraphs 64, 65 & 66. Para 12 of the Hoogeveen decision15. THE issue has recently been reviewed by the Supreme Court in Murray v Morel & Co Ltd [2007] 3 NZLR 721. The decision was reviewed by Andrew Beck in "Limitation in the Supreme Court" NZLJ July 2007, 213. (Plaintiff Tab 4) Mr Beck notes at the outset of his article that the Supreme Court was unable to state the law authoritatively for the future, as the judges were unable to agree on what the position should be. As a result the law has not been clarified. Principles applicable to strike-out applications based on limitation defences[12] I accept Mr McLellan's submission concerning the correct approach to strike- out applications where the ground is that the proceeding is limitation barred. He said:2.1 CBRE's application relies on Rules 186 and 477 of the High Court Rules, and on the inherent jurisdiction of the Court. 2.2 The test under each rule, and the inherent jurisdiction, is effectively the same, and the principles are well established. They were recently confirmed in Walkers Nurseries Ltd v Carlisle Dowling (High Court, Auckland: CIV 1994-441-57 (ex Napier CP.13/94): 28 June 2007: Frater J) at [5] – [7] as follows: (1) A limitation defence does not mean that the statement of claim discloses no reasonable cause of action but it disentitles a plaintiff to relief. As a result, National Pacific's claim is frivolous, vexatious and an abuse of the court process; (2) CBRE must show that the claim as pleaded, or with available amendments, could not possibly succeed. The Court must assume that all the factual allegations in the statement of claim can be proven. The essential enquiry is whether, if so, they would support a legal liability in respect of the cause of action and/or relief pleaded; (3) The discretion to strike out a claim in advance of trial is to be used sparingly. But, if the position is quite clear, then the defendant should not be vexed by having to go to full trial when the answer is obvious and inevitable. 2.3 The single issue of determining whether the cause of action accrued on the competing dates asserted by the parties is well suited to determination by a strike out application because it involves only law and undisputed facts.Issues[13] Section 4 of the Limitation Act 1950 says that actions in tort shall not be brought after 6 years "from the date on which the cause of action accrued". So the overarching question here is when the cause of action accrued. Even if (as theplaintiff contends) the doctrine of reasonable discoverability applies, it must fit within the words of s 4, so that the cause of action only accrues when all the necessary facts are reasonably discoverable. [14] In negligence actions the cause of action accrues when damage is suffered as this is a necessary element of the negligence cause of action. As negligence is alleged here the key question answer in establishing when the cause of action accrued is when the plaintiff suffered the requisite damage. [15] Thus, the specific issue that falls to be considered on this application is when did the cause of action in negligence accrue? There are a number of possible alternatives as to the point of accrual: a) when the plaintiff settled the property purchase in May 2000; or b) When the mortgagee sale took place in November 2001, the harm only being contingent to that point; or c) When all the relevant facts were reasonably discoverable in November 2001 (applying the doctrine of reasonable discoverability).When did the cause of action accrue?[16] As I noted earlier, the plaintiff submitted that the cause of action did not accrue until the mortgagee sale took place in November 2001. Alternatively, the plaintiff's case is that the cause of action did not accrue, and time did not start running for the purposes of the Limitation Act, until the cause of action against the valuers could reasonably have been discovered, and that could not have occurred until the mortgagee sale made it clear to the plaintiff that it had suffered loss. [17] Mr McLellan for the defendant said that the position was that the plaintiff's cause of action accrued when the defendant settled the transaction for the sale and purchase of the apartment. He said that while the plaintiff might not have taken steps to calculate its loss at that point, that was beside the point. The loss had accrued at the point of purchase. Even although the plaintiff had not calculated the loss itcould have done so. Once the loss accrued, all the necessary elements of a claim for loss which the defendant's negligence had caused, were present. [18] Mr McLellan relied upon the dictum of Lord Nicholls in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2)[1997] 1 WLR 1627 (HL) at 1630: Take first a simple case which gives rise to no difficulty. A purchaser buys a house which has been negligently overvalued or which is subject to a local land charge not noticed by the purchaser's solicitor. Had he known the true position the purchaser would not have bought. In such a case the purchaser's cause of action in tort accrues when he completes the purchase. He suffers actual damage by parting with his money and receiving in exchange property worth less than the price he paid. [19] Later in his speech, Lord Nicholls said:More difficult is the case where, as a result of negligent advice, property is acquired as security. In one sense the lender undoubtedly suffers detriment when the loan transaction is completed. He parts with his money, which he would not have done had he been properly advised. In another sense he may suffer no loss at that stage because often there will be no certainty he will actually lose any of his money: the borrower may not default. Financial loss is possible, but not certain. Indeed, it may not even be likely. Further, in some cases, and depending on the facts, even if the borrower does default the overvalued security may still be sufficient.[20] For reasons that I set out below, the first example given in the above extracts from Lord Nicholls speech applies to the case now under consideration. TheNykredit case was concerned with the second example, namely the valuer having given negligent advice concerning the value of the property which the plaintiff bank took for security. Mr McLellan referred to the second example as belonging to a class of case where the loss was contingent, as opposed to actual. [21] Mr Akel said that the present case was one in which the Court should follow the decision of the High Court of Australia in Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514. [22] In that case the plaintiff/respondent claimed damages for loss alleged to have been suffered by it as a result of misleading and deceptive conduct on the part of Wardley. The claim arose out of a loss which the plaintiff had sustained through giving an indemnity for a loan granted to Rothwells Limited. Wardley, it wasalleged, had misrepresented that Rothwell had very substantial net assets, amongst other things. The representations were not true but they induced the plaintiff to execute an indemnity. That indemnity was duly called upon and the plaintiff was required to pay substantial damages. It was the case, as the High Court concluded, that before the bank was entitled to call on the indemnity which the plaintiff had given to it, it was necessary that Rothwells should fail to satisfy what it owed under the facilities that it arranged with its bank. The High Court concluded that the indemnity on its true construction was one which created a liability on the part of the plaintiff to make payment if and when the banks relevant "net loss" was ascertained and qualified: page 524. The liability was also contingent but, the High Court said at 524:The likelihood, perhaps the virtual certainty, that there would be a loss, in the light of Rothwell's actual financial position as it stood when the indemnity was executed, did not transform the liability into an actual or present liability at that time.[23] The High Court accepted that at common law a plaintiff could only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage. The Court acknowledged that risk is itself not a category of loss: page 527. [24] An overall reading of Wardley makes it clear that the High Court viewed the loss in that case being a contingent one and that in such circumstances a different approach was justified. The Court considered that there were practical disadvantages in expecting the plaintiff to commence proceedings before the contingency was fulfilled. Then, importantly, the Court said this at page 533:These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss.[25] As I read the decision, there was no intention on the part of the majority in their judgment to depart from the usual rule as to when damage or loss is relevantly suffered in a case concerned with the acquisition of a property.[26] The Wardley decision was referred to in the New Zealand Court of Appeal decision of Gilbert v Shanahan [1998] 3 NZLR 528. The plaintiff in that case guaranteed the obligations of the company under a lease. The form of the guarantee resulted in the plaintiff assuming liability as a principle debtor. The plaintiff's solicitors did not advise him that he was under no obligation to give a guarantee. The company whose liabilities he was liable for became insolvent and a claim was made on the guarantee. [27] Tipping J in his judgment considered both Nycredit and Wardley and then at 542-543 said:Having considered the views expressed in Nykredit and Wardley, we are of the provisional view that the Australian approach is in general terms preferable to the English. For the purposes of deciding the present case it is unnecessary finally to determine the point. The crucial issue is whether a person who incurs a contingent liability thereupon immediately suffers loss or damage for limitation purposes. If a liability is subject to a condition or contingency which may or may not be fulfilled, it appears more satisfactory for limitation purposes to say that the debtor has suffered no loss or damage, unless and until an event occurs which converts the liability from a potential to an actual liability. Until then, all one can say is that the person subject to the liability may, with a greater or lesser degree of probability, suffer loss or damage. When a liability is said to be the loss or damage which the plaintiff has suffered, it is necessary on this approach to determine whether that liability is present or contingent. If it is a present liability, there will be loss or damage when it is incurred, notwithstanding it may not be dischargeable in whole or in part until a future date. If the liability is contingent, it will not amount to loss or damage unless and until the contingency is fulfilled.[28] Because the plaintiff in Gilbert had the status of a primary debtor, his liability was a present one and he suffered loss or damage at the time he entered into the guarantee and his claim was therefore statute barred. [29] A further discussion concerning the authorities in this area is to be found in the Court of Appeal judgment in Davys Burton v Thom (2007) 18 PRNZ 653. In that case the plaintiff, who was contemplating marriage to his fiancée, arranged for the appellant legal firm to draw up a pre-nuptial agreement. It was intended that the agreement would contain a provision that would exclude from the ambit of relationship property a house that the respondent owned in Rotorua. The appellant solicitors arranged for the plaintiff to execute the agreement after satisfying the formalities of s 21(6)(a) of the Property (Relationships) Act 1976. The fiancée didnot sign the agreement in New Zealand. However, when she was in the United States the plaintiff arranged for the agreement to be signed before a notary public. The notary public could not however give the appropriate advice required under section 21 of the Act. As a result it was likely that the agreement would be ineffective, unless a Court ordered its validation. The question arose as to when the appellant suffered actionable loss as a result of the solicitor's negligence. The case was argued on the basis that the Court of Appeal confirmed that a cause of action does not accrue until loss or damage is suffered. The question in the case before it was when the loss or damage was suffered. The Court reviewed the cases and made extensive reference to authorities which affirmed the distinction between a legal liability which was contingent and one which was not. [30] The Court said:[64] As is clear from these cases, in this as in other areas of law, context is everything. The authorities establish that where a plaintiff alleges that he or she has executed a document in accordance with a solicitor's negligent advice, and has suffered loss as a result, the cause of action will generally accrue when the advice is acted upon. This will be so even though the full dimensions of the loss may not become apparent until some time later. As McGee A, Limitation Periods (5th ed), London, Sweet & Maxwell, 2006 says: [I]n the overwhelming majority of cases the cause of action will accrue when the negligent advice is acted upon and this will usually be when the plaintiff executes a document. [Para 5.030] [65] Broadly, the rationale for this is that when the document is executed the plaintiff will have a package of rights that is less than that which he sought and should have received. As Lord Walker put it in Law Society v Sephton:In all these cases the claimant has as a result of professional negligence suffered a diminution (sometimes immediately quantifiable, often not yet quantifiable) in the value of an existing asset of his, or has been disappointed (as against what he was entitled to expect) in an asset which he acquires, whether it is a house, a business arrangement, an insurance policy, or a claim for damages. [Para 48]. [66] However, this outcome is not automatic. As Neill LJ emphasised inDW Moore & Co Ltd v Ferrier (see para 28 above), there is no presumption that loss arises at the time that the negligent advice from the solicitor is acted upon – it depends on when in the circumstances of the case actual damage occurs. It appears from their Lordships' discussion in Law Society v Sephtonthat the critical issue in such a case is whether the plaintiff's legal position has, through the solicitor's negligence, been altered to his immediate,financial disadvantage (see Lord Walker at [43] and Lord Mance at [67]). If so, loss or damage accrues immediately even if the full measure of that loss may not become clear until a later point in time.[31] As it turned out in the case before them the Court determined that many of the uncertainties that existed in March 1990 when the agreement was executed were removed when the respondent and his wife moved into his Rotorua house in 1993. That was because it was to be their principal family residence and in the absence of a validly executed pre-nuptial agreement preserving the house as the respondent's separate property, it became matrimonial property and the respondent's wife became entitled to a share in it. The Court said at [73]:Presumably when the couple moved into the house, the respondent did so on the basis that the agreement preserved it as his separate property. At this point, even though it was possible, if unlikely, that a Court would later validate the agreement, it can fairly be said that the respondent was financially worse off as a result of his solicitor's negligence, or that from his perspective "burdens outweighed benefits".[32] Finally I note the following helpful summary in Todd The Law of Torts in New Zealand (4th edn, 2005) at 1008:We can summarise the position in this way. There is actual loss where a plaintiff incurs an existing liability or suffers an existing diminution in value of land or personal property or a chose in action. A cause of action accrues at that date even though there has been no demand on the liability, or the loss has not crystallised, or there has been no out-of-pocket expenditure. There is only a potential loss where a right or liability is subject to a contingency which may or may not occur. A cause of action accrues only when it does occur and actual damage is suffered.Application of authorities to the present case[33] As noted above, a cause of action in negligence accrues when damage is suffered. It is at this point that time begins to run for limitation purposes. The authorities discussed above reveal that damage may be contingent as well as actual; with the former the cause of action accrues when the contingency is fulfilled and damage is suffered. The question to be answered here remains, when on the facts did National Pacific suffer damage such that the cause of action accrued?[34] In my judgment, consistent with the weight of the authorities, a trial Court would conclude that damage or loss was suffered when the plaintiff acting on and influenced by the advice of the defendant, settled the agreement for sale and purchase. At that point, it paid the price for the property that was substantially greater than the value of the property. To paraphrase Lord Nicholls in NykreditNational Pacific suffered actual damage by parting with its money and receiving in exchange property worth less than the price it paid. It then suffered loss, which was caused by the defendant's negligence. The plaintiff's loss was not a contingency that may or may not have been fulfilled. This is a different type of case from the Wardleycategory. This is not to say that the position in Wardley would not apply if the facts in this case revealed a contingent loss. However, they do not and it is not necessary for me to consider the applicability of Wardley in the case of a contingent loss here. 3 Subject to one remaining issue, I would conclude that from the point when the plaintiff settled the purchase, all the elements were present which enabled the plaintiff to sue the defendant and therefore the limitation period began to run.Reasonable discoverability of cause of actionIntroduction[35] As I understand the plaintiff's argument, the mortgagee sale which occurred in November 2001 at which the property was sold for $1.55 million was of dual significance. First of all, the sale of the property for $1.55 million was the event which caused the plaintiff to suffer loss or damage in the plaintiff's submission. That proposition is at the heart of the submissions which I considered in the preceding part of this judgment to the effect that loss or damage was not suffered at the time when the plaintiff entered into the agreement for sale and purchase but at the time when the property was sold at a much reduced price from that which the valuers had indicated in their report. The second important dimension to the mortgagee sale of November 2001, the plaintiff says, is that that date is the first point at which the fact that it might have a cause of action available to it against the defendant became or was reasonably discoverable. The essence of the submissions made by Mr Akel on behalf of the plaintiff was that the test of "reasonable discoverability" had been recognised in the decision of Invercargill City Council v Hamlin [1994] 3 NZLR 513, 522-523. Mr Akel said:THE written submission on behalf of the defendant proceeds on the basis that the authorities, in particular, Davys Burton and Murray v Morel have said that the reasonable discoverability test is no longer good law, except in some limited circumstances (as per previous Court of Appeal decisions). This is not the case. To repeat, all that the Supreme Court has said is that there is no general rule that reasonable discoverability applies. Each case must depend on its own facts in its own context.[36] Mr Akel's submission was that the proceeding in the present case should not be struck out because the plaintiff had an entitlement to invoke the doctrine of reasonable discoverability and that the proposition that the plaintiff could not reasonably have discovered its cause of action against the defendant earlier than when it commenced the proceedings, was a real issue on the facts of the case. [37] I will deal with the question of the state of the law as to reasonable discoverability first.Authorities[38] The two principle authorities that I shall refer to in this part of my judgment are Hamlin and Murray v Morel [2007] 3 NZLR 721. I shall deal first with the later of the two cases. [39] The relevant circumstances of the Murray case were that some investors in a forestry scheme sought to bring proceedings against the promoters of a forestry venture on the grounds that the prospectus contained untrue statements. They therefore sought to recover the subscriptions they made as compensation pursuant to s 56 of the Securities Act 1978. They issued proceedings in 2003. The cause of action for recovering a sum pursuant to an enactment was subject to a general six year period of limitation: s 4 (1)(d) Limitation Act 1950. The investors subscribed to the scheme in 1994. The proceedings were therefore statute barred unless the investors were able to contend that the cause of action did not arise in 1994 but at some later date. The investors argued that the point at which their cause of action arose was 1999, which was the year when they discovered that the prospectus that the defendants had issued contained allegedly false statements. The cause of actionwas struck out in the High Court. It proceeded to the Court of Appeal and then the Supreme Court. [40] Five judgments were delivered in the Supreme Court. The Supreme Court upheld the judgment of the High Court striking out the cause of action. I adopt the summary of the ratio of the case as it is described by Mr Andrew Beck in his article in the New Zealand Law Journal July 2007 at p 213, 215:• There is no general doctrine of reasonable discoverability that applies to limitation periods in respect of all causes of action: Blanchard, Tipping, McGrath and Henry JJ. It is possible that Gault J might have been prepared to go as far as espousing a general doctrine, but his decision seems to leave the final decision up to the Court;• S v G and Searle & Co were legitimate developments of the law by the Court of Appeal, and remain as valid statements of the law for the types of sexual abuse and personal injury cases falling within their ambit: Blanchard, McGrath, Gault, Henry JJ;• It is possible that the use of reasonable discoverability in determination of limitation periods might be extended beyond the situations accepted in S v Gand Searle & Co on a case by case basis: McGrath, Gault, Henry JJ.[41] S v G [1995] 3 NZLR 681 was a case where the plaintiff alleged that she had been sexually abused by a medical practitioner. The plaintiff who was an adult brought her claim in respect of sexual abuse perpetrated on her when she was a child. Although she was aware of the abuse, the plaintiff had not linked it with the serious psychological and emotional harm she had suffered. Therefore, as McGrath J put it, at para 97:Reasoning by analogy with its decision in Hamlin, the Court of Appeal decided that the cause of action accrued and time began to run under the Limitation Act, only when the damage should have been linked by the plaintiff to the abuse she had suffered.[42] The judgments in Murray also referred to the Court of Appeal decision of G D Searle & Co v Gunn [1996] 2 NZLR 129. That was a claim for personal injury where the plaintiff claimed to have suffered pelvic inflammatory disease as a result of being fitted with a negligently manufactured intrauterine device. The device was fitted in 1981 and the plaintiff did not attribute the later adverse health effects to the device until many years later.[43] In both S v G and G D Searle & Co, the Court of Appeal held that the plaintiff's cause of action did not accrue until the plaintiff could have reasonably discovered the facts relevant to the cause of action. In S v G the damage which the plaintiff claimed was psychological damage resulting from her abuse. The Court of Appeal accepted her submission that the cause of action did not accrue until she had discovered or ought reasonably to have discovered the link between the abuse she had suffered at the hands of the defendant and the psychological difficulties from which she was now suffering. [44] In Searle the plaintiff claimed that she did not become aware until 1991, ten years after she was fitted with the intrauterine device, of the link between the fitting of that device, the pelvic inflammatory disease that she suffered and the other consequences including ectopic pregnancies and infertility. The Court of Appeal in deciding Searle expressly referred to the Privy Council decision in Invercargill City Council v Hamlin [1996] 1 ALL ER 756 (PC). [45] In Murray the majority of the Supreme Court, as I have noted at paragraph [40] above, accepted the validity of both S v G and Searle & Co. But as I have also noted, the majority did not accept that there was any general doctrine of reasonable discoverability. [46] I accept that on the current state of the law represented by Murray, in general terms the issue of when a plaintiff ought reasonably to have discovered the existence of the facts given rise to his/her cause of action is not a matter that bears upon when the cause of action accrued. Reasonable discoverability may be applicable in the types of cases that were the subject matter of Invercargill City Council, S v G, and Searle & Co.[47] The Invercargill City Council – type case is concerned with concealed defects in buildings. In such cases, the cause of action does not accrue until the plaintiff ought reasonably to have become aware of the defect. That may be because discovery of the defect will be the date at which loss is suffered (because of the effect on the value of the property caused by the defect manifesting itself) or it may be explicable on the more extensive basis that justice requires that a cause of actionnot be viewed as accruing in the case of latent defects on some wider basis such as that stated in BP Oil New Zealand Limited v Ports of Auckland Limited [2004] 2 NZLR 208. [48] It also seems to be that cases in which the factual situation is substantially the same as that in S v G or Searle & Co Limited are cases where reasonable discoverability of the existence of the cause of action will determine when the limitation period starts. As well, Murray appears to recognise that reasonable discoverability will apply to cases that may fairly be judges as being analogous withS v G or Searle & Co Limited: see the judgment of McGrath J in Murray at [101]. While there is no general doctrine of reasonable discoverability, whether the principle is to be applied has to be decided on a case by case basis. I will consider in the next section whether the facts of the present case require the application of the principle.Application of the authorities to the present case.[49] The plaintiff in the present case submitted that it did not actually know that there had been a loss until the mortgagee sale occurred. But that is not the same thing as saying that the loss could not reasonably have been discovered. The nature of the plaintiffs claim was not that loss was masked from view because of the special circumstances relating to the damage or that a combination of the nature of the damage suffered and the personal circumstances of the plaintiff which had been affected by that damage were such that the plaintiff could not have been reasonably expected to have known about the damage. [50] The plaintiff did not contend (and could not realistically contend) that it was in an analogous position to that of the plaintiff in S v G, who, even if aware of the harm done, did not make the connection between the actions of the defendant and the harm she had suffered. Such considerations may understandably be present in sexual offending-type cases because of the recognised psychological repercussions of a defendant's actions. But such cases are a long way distant from a commercial transaction of the kind here.[51] The essential issue in this case is not whether the defendant can show the existence of a fact which will give rise to a limitation defence but rather a question of law as to whether the doctrine of reasonable discoverability applies in these circumstances. [52] The plaintiff in this case did not say that it could not have discovered the loss that it claimed to have suffered before the date when the mortgagee sale occurred. Such a contention would in any event have been unlikely to succeed. The value the building had at the time when the plaintiff entered into the agreement for sale and purchase is a question of fact. That is to say, the value of the property could have been determined by, for example the opinion of a valuer. [53] It might be arguable that it is not particularly fair or reasonable for a valuer who allegedly misinformed his client about the value of a property, to defend the claim against himself on the basis that another, competent and responsible valuer, who did not make the same mistake as the defendant, would have alerted the plaintiff to the fact that loss had occurred within the limitation period. [54] There were two consequences of the allegedly negligent advice. The first is that the plaintiff entered into an agreement by which it suffered financial loss. The second and less direct detriment which it suffered, was that the very actions of the defendant lulled the plaintiff into a false sense of security about a matter concerning which, had it known the truth, it may well have promptly issued timeos proceedings against the defendant. [55] But the relationship between the defendant and the plaintiff in this case was not of a kind that would prevent the plaintiff from discovering the relevant facts concerning the cause of action. The plaintiff was not under any disability arising from the actions of the defendant which would inhibit or prevent it from enquiring into the actual circumstances of its purchase of the property; it was not disabled as a result of the defendants actions from making the enquiries which would have revealed that it had brought the building at a price which was substantially in excess of its market value. If that approach is correct, the case is not analogous with the S v G type of authority. The present case is not one where the actions of the defendantcreated concealed or "invisible" circumstances without which the plaintiff would not appreciate that it had suffered loss as a result of the defendant's actions. All the information that was required for the plaintiff to understand its position was there to be had. [56] If the approach I have adopted is correct, then the circumstances of the plaintiff's case do not take it outside the ordinary group of cases to which the principle of reasonable discoverability has no application. The cause of action in this case accrued when the plaintiff settled the purchase of the property. Therefore, it must follow that the plaintiff's proceeding has been commenced more that six years after the accrual of the cause of action and it is therefore caught by s 4 of the Limitation Act 1950.Discovery[57] The alternative argument that was put forward by the plaintiff was that the strike- out application on the limitation point should wait until full trial when all the evidence can be considered. If that is not to be the case the plaintiff's counsel submitted that the application would be deferred until completion of interlocutories and in particular discovery. [58] Dealing with the first point, I am of the view that the sequence in which various interlocutory steps are to be completed, to the extent that it depends upon the Court's determination, should be judged by asking what justice requires in the particular circumstances of the case. On the one hand, the plaintiff should have reasonable opportunities to investigate any material which might assist its case and which may help circumvent defences, including the Limitation Act. Against that, where it is a clear case in which a claim is statute-barred, it would be unfair to the defendant to require it to undertake the burdensome process of discovery when there is not particular reason to assume that it will have any effect on the limitation defence. [59] While I accept that the defendant would be required to disclose in the process of discovery any documents which related to the issue of limitation, I am far fromclear that it is likely that there would be any such documents. The cause of action is in negligence and as I have already mentioned the plaintiff suffered loss because it entered into the agreement and acquired property in circumstances where it was misled by the allegedly excessive valuation which the defendant provided. [60] The chain of facts which the plaintiff will wish to establish will be: a) That it was supplied with a copy of the valuation report; b) That the report valued the property at $2.6 million as at 29 October 1999; c) That the valuation report caused it to confirm finance and make the agreement unconditional; d) That it became the owner of the property 12 May 2000. [61] The only way that the plaintiff could make head-way on the limitation point would be by showing that there are circumstances present which might justify a departure from the orthodox view as to the date when the cause of action accrued. That is there would have to be some ground for supposing that by a process of analogy with the exceptional categories represented by cases such as S v G, that there were circumstances relating to the present case which would justify departure from the normal measurement of the limitation period. I have to say that Mr Akel did not in his submissions suggest any such basis. No doubt that was because he did not accept that what I had described as the exceptional cases are in fact that – his submissions being based on the proposition that reasonable discovery was more a doctrine of much wider applicability than I have been prepared to admit. [62] I accept that in the course of argument there was an exchange between counsel and the Bench in the course of which Mr Akel alluded to a possible claim based on fraud, but at the same time reminded me of the inhibitions that counsel are subject to including fraud without a proper basis for so doing: Rules of Professional Conduct for Barristers and Solicitors, 7th Edition, paragraph 8.04.[63] In my view having regard to the circumstances of the case so far as they are disclosed from the chronology of events and the pleadings, the possibility that the defendant might be subject to a non-orthodox limitation period is nothing more than a bare possibility. Because the foundation for such an argument has not been laid, it is impossible to envisage what, if any, types of documents would be turned up by discovery which might assist the plaintiff on the discovery point. It is this uncertainty that means I am not persuaded that there should be a delay in dealing with the strike-out application until after the completion of discovery. [64] Likewise, it is difficult to gauge what evidence might be produced at trial which would enable the plaintiff to contend for a non-standard limitation period. [65] There are no proper reasons for delaying the strike-out application.Order[66] There will be an order striking out the plaintiff's proceeding. The parties should let me have concise memoranda (no more than three pages) on the issue of costs. I will then hear them at the conclusion of a chambers list at a time and date which the Registrar is to allocate. _____________ J.P. Doogue Associate Judge