Statute of Limitations

Thursday, September 21, 2017

The law refers to the term ‘limitation period’. This term is defined as the maximum period of time which can elapse from the time of a cause of action arising until the commencement of court proceedings pertaining to that cause of action: s12 Limitation Act 2005 (WA). It operates to prevent a potential plaintiff from bringing an action after a substantially long period of time after it first arises. If this cause of action were to be permitted to go ahead in these circumstances it could have a problematic effect on the administration of the court proceedings as it relates to the evidence presented, namely, the availability of witnesses and documents and the accuracy of detail which is the subject of the evidence.

A practical example is the 6 year limitation period as stated in the Trade Practices Act 1974 (Cth). If a party was to be subjected to unconscionable conduct as defined in the Act, and this conduct occurred on June 30, 2000, that party could only succeed in bringing its cause of action before the court, under the applicable provision in the Act, if it did so by June 30, 2006. At any time after that it would be open to the other side to plead the expiry of the limitation period as a defence, on which they would succeed, if judicial discretion was not exercised to extend the duration of the period. If the defence was not originally pleaded by that party, the court has a very wide discretion to allow an amendment to the defence so that it can be pleaded: Grimwade v Davidson [1994] Aust Torts Reports 61,385 (81-278).

All Australian States have specific pieces of legislation which deal with limitation periods across a wide range of areas (the Western Australian statutes are the Limitation Acts of 1935 and 2005). However, there is no limitation period that applies across the board. Different causes of action across various areas of the law have varied limitation periods that apply as dictated by specific and general legal policy. It should also be noted that some pieces of legislation give the presiding judge the discretion to extend the limitation period if this is “just and reasonable” in the circumstances: Commonwealth v Smith [2005] NSWCA 478. The limitation period can also be shortened in the same way as it can be extended: Part 3 Limitation Act 2005 (WA).

These Statutes of Limitation and Case Law demonstrate the various applications of the principle to the different areas of the law, the most practical and important which deserve mention here.

CONTRACT

The limitation period applicable to this area of the law differs depending on whether a simple contract or a deed is involved. With simple contracts the time period is 6 years calculated from the point of breach. With deeds a longer period applies (12 to 20 years depending on the jurisdiction). Expiry of the applicable limitation period does not discharge the contract; it merely terminates the right to sue. Unless a court can be persuaded to extend time, the right of action simply lapses.

PROPERTY

An action to recover land cannot be commenced if 12 years have elapsed since the cause of action accrued: s19 Limitation Act 2005 (WA).

PERSONAL INJURY/DEATH

An action for damages relating to a personal injury to a person cannot be commenced if 3 years have elapsed since the cause of action accrued: s14(1) Limitation Act 2005 (WA). An action under the Fatal Accidents Act 1959 (WA) for damages relating to the death of a person cannot be commenced if 3 years have elapsed since the death: s14(2) Limitation Act 2005 (WA).

CORPORATIONS

S 82(2) of the Trade Practices Act 1974 (Cth) states that an action for damages must be commenced within 6 years from the date on which the cause of action first arises. It was stated in the 2003 case of Kalgoorlie Consolidated Gold Mines Pty Ltd v F L Smidth Inc. by Hasluck J that loss or damage is the basis of a cause of action under s 82(1) and therefore a cause of action does not accrue until actual loss or damage is sustained. Another principle that came out of this case was that when conduct causes numerous losses which occur at different times, the right to recover the amount of each loss accrues only when the particular loss accrues.

In the 2005 case of Energex Ltd v Alstom Ausralia Ltd, the Federal Court considered the meaning of the term “suffers” in the context of s 82(1). It was held that it would be stretching the construction of the section to breaking point to import, through the word “suffer”, an element of awareness of loss necessary to complete the cause of action.

The High Court, in the 2004 case of Murphy v Overton Investments Pty Ltd, clarified the meaning of “loss” or “damage” as expressed in s 82. It was held that these terms are not to be given a narrow meaning. It was also held that the loss or damage is not confined to economic loss and includes a reference to injury. They also made the point that it is necessary to identify the detriment that is said to constitute the loss or damage, and that the mere risk of loss is not in itself a category of loss.

S 82 does not operate to extinguish, at the end of the relevant period, a claim which is based on a cause of action created by that section, it only operates to bar the remedy: PLS Industries Ltd v Simplot Australia 174 FLR 111.

The Corporations Act 2001 (Cth) imposes a 6 year limitation period on an applicant from the time a cause of action arises as a result of specific corporate misconduct: s1325(4).

Liability limited by a scheme approved under Professional Standards Legislation.

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