Turning The Corner - Have Limitation Periods Expired For GFC Financial Loss Claims?

In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points. A question for potential defendants when it comes to the waves of litigation caused by the GFC is whether claims for GFC losses are now statute barred or whether limitation periods are likely to expire in the near future.

GFC-based litigation remains a risk for the financial services industry

There are indications that many plaintiffs are contemplating bringing further litigation to recover GFC losses. Each case turns on its own facts, however, where a plaintiff claims damages for an investment frozen or wound up before April 2009, few causes of action will be available and the claim may now be time barred completely.

Alternatively, if a plaintiff seeks losses for investments entered into prior to April 2009, any contract causes of action is likely to be statute barred. Negligence, statutory duties and misrepresentation actions may still be available to a plaintiff depending on when actual damage was realised. If only negligence and misrepresentation actions are available, a plaintiff's contributory negligence can be used to reduce any recoverable loss.

Ascertaining whether a claim is statute barred and strategic considerations

To properly ascertain whether a claim is statute barred, defendants must keep in mind that:

They generally bear the obligation to plead and establish evidence of the limitation. Delay in raising a limitation defence may later prevent them from alleging that a claim is statute barred. It is only in the clearest cases that limitation arguments are resolved in interlocutory proceedings. Even where they have a strong limitation argument, liability and quantum issues should be strongly defended until final judgement is given. Where loss is an element of the action, defendants will need to quickly identify the true cause of a plaintiff's damage and what factors or contingencies rendered the loss inevitable. This will require examination of each transaction a plaintiff entered into, and why the transaction performed poorly. Limitation barriers may also encourage plaintiffs to plead more exotic allegations to take advantage of their last accruing cause of action. For example, a plaintiff may cast damages at later points in time or frame their case around failures to warn, as opposed to attacking a defendant's initial conduct when recommending or placing investments.

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