The solicitor as plaintiff in this case claimed that the relatives' documentary title to the painting had been extinguished under Limitation of Actions Act 1958 (Vic). The Court disagreed, holding that s 27(b) of the Act operated to extend the limitation period.
It was held that the relatives' documentary title to the painting was superior to the solicitor's possessory title; the relatives were entitled to retain the painting. The Court indicated that
The parties to the proceeding are innocent of any wrongdoing and unfortunately one side has to lose. On the one hand, the plaintiff, Frank Ernest William Levy, a solicitor, was left the painting by a grateful client in his will. On the other hand, the defendants, Maxwell James Watt and Michael Ian Watt, are the executors and residuary beneficiaries of their uncle, Albert James Watt, from whom the painting was stolen in April 1991.The uncle purchased the work in 1953 from Melbourne auction house Decoration Co for 26 pounds 5 shillings. In 1991 the painting and a television set were stolen in a burglary of his house, timed between 11.00 and 11.20 am. The police investigation failed to identify the thief or to produce any information regarding the painting's whereabouts. The nephews continued their uncle’s efforts to locate the work, after his death in 1993, including offering a “substantial reward” and engaging ARM International Pty Ltd to undertake an investigation.
In 2010, the nephews became aware that a major Rupert Bunny retrospective was to be held at the National Gallery of Victoria and again publicised the theft. Email to one of the defendants' daughter to those associated with the exhibition. Contact with an informant resulted in execution of a search warrant at the solicitor’s home, with the painting being found on display in the dining room. (The solicitor is not accused of stealing the work or knowingly receiving stolen property.) The stolen work was seized by the police. The solicitor then became aware that the painting had been stolen; he co-operated with the police in their investigations. He had gained possession of the work through the will of a deceased client.
The Court notes that
On 18 June 2010, an interpleader hearing, initiated by Detective Senior Constable Katherine Laird under s 125 of the Police Regulation Act 1958, came before Magistrate Johnstone in the Magistrates’ Court. At the conclusion of that hearing on 18 June 2010, his Honour ordered that “the Rupert Bunny painting Girl in Sunlight be returned by Victoria Police to the Watts on the basis that they jointly and severally keep the painting until such time as ownership is determined by a court or the matter of ownership is not pursued within in [sic] a limited period of six months”. The Painting was also to be insured by the Watts for not less than $200,000. The period of six months within which Mr Levy [the solicitor] was to commence a proceeding to pursue ownership of the painting was included at the request of the Watts’ counsel and was not resisted by Mr Levy’s counsel.
On 29 September 2010, Mr Levy commenced this proceeding seeking a declaration that the defendants’ proprietary rights in the Painting had been extinguished and that Mr Levy was the owner of it. He also sought an order that the Painting be returned to him. It was pleaded in the statement of claim that if the Painting was removed without the consent of Mr James Watt on 11 April 1991 then there had been successive conversions of the Painting (by the thief in April 1991, by Mr Rand in about 1994 when he acquired the Painting, by the executors of Mr Rand’s estate when they obtained a grant of representation in February 1998 and by Mr Levy when he took physical possession of the Painting in early 2008) and that by operation of s 6 of the Limitation of Actions Act 1958, any title of the defendants to the Painting had been extinguished on the expiration of six years after 11 April 1991.The plaintiff’s claim was based entirely on the operation of the Limitation Act, with his representatives arguing that any cause of action which the defendants may have had regarding the work had long since expired (under s 5(1)(a) of the Act) and that any title to the work had been extinguished under s6(2) of the Act. The solicitor’s possessory title to the work should prevail, as the defendants’ documentary title was extinguished upon expiration of six years from the date on which the painting was stolen, so that the solicitor's possessory title prevailed against the world at large. That conclusion was unaffected by the Magistrate’s order, which rendered the defendants “mere custodians” of the work pending the Supreme Court’s determination of the competing claims to the entitlement to the Painting. The defendants’ reliance on s 27(a) or 27(b) of the Act to postpone the operation of the limitation period on an allegation of fraud could not succeed, because conversion was not an action “based upon” fraud and s 27(b) did not apply because the fact of the theft was not concealed from the uncle by fraud. The defendants could not prove that the plaintiff or any of his agents or persons through whom he claimed had committed any fraud. Using the Briginshaw standard the Court could not place any weight on the defendants’ circumstantial case for a postponement of the limitation period.
The defendants submitted that because the limitation period was postponed pursuant to s 27(a) or 27(b) it did not commence to run until May 2010 when the defendants learned who had possession of the work. The thief never had any valid title to the painting and thus - nemo dat quod non habet - could not pass a valid title to the solicitor. Alternately, if the defendants were unable to rely on the postponement provisions they could still succeed on the basis that they currently had possession of the work and the qualification of s 125 of the Police Regulation Act 1958 (Vic) – ie that a delivery order did not affect the rights or liabilities of persons claiming the goods or the person to whom such goods were delivered – did not assist the solicitor, because he had not been in possession of the work since the police lawfully executed the search warrant in May 2010. Possession was argued as giving the defendants a superior right to the painting unless the solicitor could establish title to it by showing that the thief was a bona fide purchaser for value without notice.