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Time to sue: The law of limitation periods

Are there time limits on when you can sue? Read about what limitation periods are, and how they work.

WHAT ARE LIMITATION PERIODS?

Limitation periods in the law impose time limits within which types of civil proceedings should ordinarily be commenced. In commercial litigation, statutes of limitations impose most of the limitation periods. In Queensland, the statute of limitations is the Limitation of Actions Act 1974.

There are other time limits imposed under the law, but this article concerns time limits imposed under statutes of limitations, particularly the Limitation of Actions Act 1974 (Qld).

Barring the remedy only

It is commonly thought that limitation periods prohibit a person from suing out of time, however this is inaccurate.

As Donaldson LJ observed in Ronex Properties Ltd v John Laing Construction Ltd [1983] Q.B. 398:

“It is trite law that English Limitation Acts bar the remedy and not the right; and, furthermore, they do not even have this effect unless and until pleaded. Even when pleaded they are subject to various exceptions…”

In Australia, the position is the same. In In James v ANZ Banking Group Ltd (1986) 64 ALR 347, Toohey J said of a limitation period under the then Trade Practices Act 1974 (Cth) that:

“Although s82(2) is expressed in terms that an action may be commenced within three years after the date the cause of action accrued, the general approach to such a provision in comparable legislation has been that it constitutes a defence. A respondent or defendant may, for whatever reason choose not to plead a limitation provision in which event it is not encumbent upon the court to consider the question for itself. Indeed, in the absence of such a defence, a court that did so would trespass beyond the issues raised by the pleadings. The position is in a marked contrast to that where the jurisdiction of a court to deal with the claim before it is in question.”

More recently, in Brisbane City Council v Amos [2019] HCA 27, Kiefel CJ and Edelman J said of the Limitation of Actions Act 1974 (Qld) that:

“Although s 10(1) is expressed in terms that the action “shall not be brought”, this has long been understood as barring the “remedy”, that is, as permitting a good defence to be pleaded but not as extinguishing the underlying rights.”

Therefore, limitation periods are not a mandatory prohibition on suing that bar the Court from having jurisdiction (power) to hear the claim. They instead provide a defence available for defendants when proceedings are brought out of time, which must be specifically pleaded to be upheld. Unless a plaintiff can show that an exception would overcome the limitation period hurdle, the defence, once pleaded, must defeat the parts of the claim brought out of time.

Because limitation periods have traditionally been applied to as a defence for the private benefit of defendants rather than a broad prohibition on commencing proceedings out of time, the High Court recently held that a contractual promise not to rely on a limitation period defence is not unenforceable as contrary to public policy: Price v Spoor [2021] HCA 20.

WHEN DOES TIME START TO RUN?

Time starts to run for the purposes of the limitation period once the cause of action arises/accrues.

When the cause of action arises

The cause of action ordinarily arises as soon as a plaintiff is entitled to sue. Usually, this means when the plaintiff has suffered actual loss, because the wrongful acts or omissions said to have caused the loss must have occurred before the loss was suffered. From that moment, the relevant limitation period starts to run.

In Cooke v Gill [1873] LR 8 CP 107, Brett J observed that:

“a cause of action to mean every fact which is material to be proved to entitle the plaintiff to succeed.”

Actual loss

A cause of action in negligence accrues when the claimant sustains actionable damage, which means real as opposed to purely minimal damage: Cartledge v E. Jopling and Sons Ltd [1963] A.C.758 at 771; Khan v Falvey [2002] EWCA Civ 400 (cf. para. 43). Damage is “any detriment, liability or loss capable of assessment in money terms”: Forster v Outred & Co [1982] 1 W.L.R. 86 at 94.

To borrow the words of Toohey J in James v ANZ Banking Group Ltd (1986) 64 ALR 347, where “Loss and damage is the gist of the action… Once an Applicant has suffered loss or damage relevant to his claim, time begins to run”. When the Plaintiff first knew of the loss is usually immaterial.

In contrast, in Melisavon Pty Ltd v Springfield Land Development Corporation Pty Limited [2014] QCA 233, the plaintiff sued structural engineering consultants for failing to design the lower slab of a clubhouse in such a way that could tolerate ground heave greater than 40 millimetres. The Queensland Court of Appeal by majority decision held that the cause of action arose when it suffered economic loss, which was when the latent defect (in this case, the allegedly faulty design of the clubhouse) ‘first become known or manifest in the sense of being discoverable by reasonable diligence’.

Professional negligence

In professional negligence, the limitation period in most cases begins to run on the date that the negligent advice was given: West Wallasey Car Hire Ltd v Berkson & Berkson (a firm) [2009] EWHC B39 (Mercantile), Maharaj v Johnson [2015] UKPC 28; [2015] P.N.L.R. 27; Tesco v Costain Construction [2003] EWHC 1487 (TCC). This is because the loss is suffered once the advice is relied upon, which is almost always at the time the advice was given, or very soon afterwards: see DW Moore and Co Ltd v Ferrier [1988] 1 WLR 267, Forster v Outred and Co [1982] 1 WLR 86, Baker v Ollard and Bentley [1982] 126 SJ 593.

In the “flawed transaction” case, a plaintiff may have entered into a transaction with a third party which was less favourable to them than if their advisors had not been negligent. In such a case, the Court will consider whether the effect of the transaction was to place the claimant in an objectively less favourable position than if the advisors had not been negligent: Elliott v Hattens Solicitors [2021] EWCA Civ 720. Loss can be found to have been sustained at the time the transaction had been entered into, as “it may be relatively easy to infer that the claimant has suffered some immediate damage, simply because he did not get what he should have got”.

However, if a solicitor or barrister gives two pieces of negligent advice on two occasions, and the first is out of time, the second advice can still be sued on, although that may result in a smaller claim: Sciortino v Beaumont [2021] EWCA Civ 786.

Interests in land

The Limitation of Actions Act 1974 (Qld) provides that the right of action is deemed to be accrued as follows:

● For an action to recover land, the date of the dispossession or discontinuance, subject to the remaining provisions of the Act.

● For future interests in land, the date on which the estate or interest fell into possession by the determination of the preceding estate or interest.

● For equitable interests in land including interests in the proceeds of the sale of land, the same date it will would accrue if it were a legal interest in land.

● For an action to recover land by virtue of a forfeiture or breach of condition, the date of the forfeiture or breach of condition.

● For an action of the person entitled to land subject to a tenancy at will, the date of its determination

Where the period of limitation prescribed by the Limitation of Actions Act within which a person may bring an action to recover land (including a redemption action) has expired, the title of that person to the land shall be extinguished.

Restrictions on suing

A statutory restriction on commencing Court proceedings until certain requirements have been met does not normally delay when time starts to run for limitation period purposes. So, pre-proceeding steps for personal injury claims in Queensland ordinarily need to be completed within the three year limitation period for the claimant to be able to sue in time.

Similarly, in Allen v Ruddy Tomlins & Baxter [2019] QCA 103, the Queensland Court of Appeal held that a costs assessment did not have the effect of prolonging a limitation period within which a solicitors firm may recover its fees, notwithstanding a statutory restriction on suing for such costs when a costs application had been made. The Court held that the solicitor’s right is founded upon simple contract, and a costs assessment was merely a procedural mechanism for resolving disputes relating to the quantum of legal costs, not a separate cause of action.

COMMON LIMITATION PERIODS

The Limitation of Actions Act 1974 (Qld) imposes the following limitation periods in Queensland:

6 years for an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person

6 years to enforce an award or recognisance

6 years for an account or a specialty

12 years to enforce a judgment

2 years to recover a penalty or forfeiture, or a sum by way of a penalty or forfeiture

1 year for defamation actions

●  3 years for personal injury, save for cases of a dust-related condition or child abuse

12 years to recover land

● 2 years for action for contribution under the Law Reform Act 1995 or 4 years after the limitation period for the principal action, whichever is the earliest.

In Brisbane City Council v Amos [2019] HCA 27, the High Court unanimously held that where a cause of action is subject to two or more limitation periods, a Defendant is entitled to plead and rely on the shorter limitation period.

EXTENDING THE LIMITATION PERIOD

In some circumstances, the limitation period will be or can be extended.

Automatic extension

In cases of fraud or mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it.

In cases where the cause of action accrues when a person is under a legal disability, the action may be brought at any time before the expiration of 6 years from the date on which the person ceased to be under a disability or died, whichever event first occurred, notwithstanding that the period of limitation has expired.

An acknowledgement of title or part payment results in the cause of action accruing on the date such an event occurs.

For workplace injuries, section 302(2)(a) of the Workers’ Compensation and Rehabilitation Act 2003 provides that the claim against the employer can be brought up to six months after the insurer gives a notice of assessment for the injury, or within 6 months after a tribunal decides the permanent impairment (DPI) if a complying Notice of Claim form is given within the limitation period.

For motor vehicle accidents, section 57(2)(a) of the Motor Accident Insurance Act 1994 extends the time within which a claim for personal injury can be brought by up to six months if a complying Notice of Accident Claim form is given within the limitation period.

For other types of personal injuries claims subject to limitation periods, section 59(2)(a) of the Personal Injuries Proceedings Act 2002 extends the time within which a claim for personal injury can be brought by up to six months if a complying part 1 Notice of Claim is given within the limitation period.

Application for an extension

If a material fact of a decisive character relating to the right of action for personal injury was not within the means of knowledge of the claimant until a date less than a year before the expiration of the limitation period, a claimant may apply to extend the limitation period by one year.

Section 32A of the Limitation of Actions Act 1974 (Qld) provides a Court with a discretion of extending the limitation period for defamation claims for a period of up to 3 years running from the date of the alleged publication of the matter if the plaintiff satisfies the court that it is just and reasonable to allow an action to proceed.

For motor vehicle accidents, section 57(2)(b) of the Motor Accident Insurance Act 1994 allows a Court to give leave to the claimant to start a proceeding after the limitation period has expired if a complying Notice of Accident Claim form is given within the limitation period.

Section 43 of the Personal Injuries Proceedings Act 2002 allows a Court to give leave to the claimant to start a proceeding in the court for damages for personal injury despite noncompliance with Part 1 of Chapter 2 of that Act, if the court is satisfied there is an urgent need to start the proceeding.

Section 59(2)(b) of the Personal Injuries Proceedings Act 2002 allows a Court to extend the time within which a claim for personal injury can be brought in the court for damages based on a liability for personal injury by a period determined by the Court, despite noncompliance with Part 1 of Chapter 2, if a part 1 Notice of Claim is given.

Whether time will be extended is a discretionary decision of the Court, that will consider whether liability is disputed, whether there has been a conscientious effort to comply with the pre-proceeding requirements in time and the length of and explanation for any delay.

CONCLUSION

Limitation periods do not impose a prohibition on commencing proceedings, but they instead afford an available defence to defendants should a proceeding be brought against them out of time. For this reason, it is often said that limitation periods bar the remedy but not the right.

The limitation period starts to run once the cause of action arises. This is normally when the plaintiff is able to sue, and when loss is the gist of the action, as soon as the plaintiff suffers any real loss. In cases where there are certain mandatory statutory requirements to be satisfied before suing, these usually do not change the time when the limitation period starts to run.

For claims where loss is an essential element, the cause of action almost always arises as soon as loss is first suffered, no matter how minor, and even if the Plaintiff did not know at the time he or she had sustained any loss.

The Limitation of Actions Act 1974 (Qld) imposes various limitation periods depending on the cause of action, the types of damages sought and the remedies sought. However, there are exceptions to the limitation periods. Some claims are not subject to any limitation period. In others, the limitation period is automatically extended in certain circumstances. And in defamation and personal injury claims, a plaintiff can apply to the Court to extend the limitation period.

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