Contracting Out Of Statutory Limitation Periods

• Published date: 14 October 2021
• Law Firm: Vincent Young
• Author: Mr Jordan Smith and Stefan Fenk

Recently the High Court of Australia (Court) held that parties may validly contract out of statutory limitation periods. This decision will likely have broad application and impact on clauses in contracts moving forward. Care should still be taken when drafting contractual clauses that seek to exclude statutory limitation periods as the decision may not apply to certain types of contracts or limitation periods set out in some statutes.

Facts

The proceedings first commenced in the Supreme Court of Queensland where the respondents, as mortgagees, claimed $4 million as monies owing under two secured mortgages and the recovery of possession of the land the subject of the mortgages. The appellants alleged that the respondents were statute barred from bringing the action under the Limitation of Actions Act 1974 (Qld) (Act) and therefore the Court did not have jurisdiction to hear the matter.

Section 10(1)(a) of the Act provides:

(1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose'

(a) ' an action founded on simple contract'

Section 13 of the Act provides:

An action shall not be brought by a person to recover land after the expiration of 12 years...