Are you out of time? – Application of the Limitation of Actions Act in Qld

In Australia, each state and territory has legislation that sets out a prescribed limitation period for particular causes of action. The length of the limitation period and the effect of the expiry of a limitation period on a cause of action varies according to the type of action and the jurisdiction in which the cause of action is commenced.

Limitation Periods and Extensions of the Limitation Periods

In Queensland, the Limitation of Actions Act 1974 (Act) provisions that deal with limitation periods are subject to the provisions that deal with the extension of the limitation periods. In this respect, the Act sets out specific periods of times within which proceedings must be started for certain causes of action.  If an action is not started before the period has expired, and later a court action is commenced, the defendant can use the provisions of the Act to provide a complete defence to the claim. As such, if you have a cause of action, you need to consider the limitation period for your specific cause of action and your rights to commence proceedings.

An ‘action’ is defined as any proceeding commenced in a competent court. A cause of action is judicially defined as the facts or combination of facts which give rise to a right to bring the proceeding. A cause of action arises when there is a person who can sue, a person who can be sued and all the facts which the plaintiff must prove in order to succeed have occurred. The determination of when time begins to run depends upon the date on which the cause of action accrues or arises and varies depending on the cause of action. 

Limitation Periods and the Effect of the Commencement of Action

For the purposes of this article, we focus on the cause of action for breach of contract. Pursuant to section 10 of the Act, a cause of action for breach of contract must be commenced within six (6) years of the time within which the cause of action arose. This cause of action begins to accrue at the time of the breach, not at the time the damage is sustained. Importantly, the accruing time commences from the date of breach regardless of when damage occurs. Once time has begun to run, it continues to do so until stopped or stayed by the commencement of a proceeding by the filing of an originating process. Proceedings are commenced on issue or filing rather than service of the originating process. It should be noted that the commencement of proceedings stops time running only in respect of the cause of action sought to be enforced in those proceedings. Time continues to run in respect of other causes of action, although the running of time may be deemed to have been stayed where such other causes of action are added by a later amendment.

Extension or Postponement of Limitation Periods

As alluded to above, under the Act, certain circumstances can cause the limitation periods to be extended or postponed. These circumstances include where there is an acknowledgment or part payment of a debt by the person liable, resulting in the limitation period restarting from the moment of acknowledgement or part payment. The acknowledgment or part payment must be with respect to a right of action which has accrued to recover a debt or other liquidated pecuniary claim.

Acknowledgement

To determine whether there has been an acknowledgment: 

  1. there must be an express or implied admission that a debt is due or unpaidand that the debtor is legally liable to pay it;
  2. it must be in writing and made on the day when the writing is signed by the maker;
  3. it need not be contained in a single document but may be made up of a number of documents which can be combined to make up the acknowledgment; and 
  4. the absence of an intention on the part of the debtor to communicate acknowledgement to the creditor or his or her agent is immaterial so long as the document is actually delivered to the creditor. 

In order to constitute such an acknowledgment there must (upon the fair construction of the words read in light of the surrounding circumstances) be an admission of the debt. 

The effect of an acknowledgment is that (before the date of the acknowledgement), the time during which the limitation period runs does not count. An acknowledgement confirms the existence of a debt at a date prior to the cause of action, and it cannot operate to revive a cause of action that is already extinguished. 

Part Payment 

A part payment of a debt or liquidated sum by the debtor constitutes a form of acknowledgment that has the effect of extending the limitation in the same way as an acknowledgement. In this regard, the limitation period begins to run again from the date of the part payment. 

To establish a part payment:

  1. the debtor must make the part payment either personally or through his or her agent; and 
  2. the part payment must be made to the creditor or his or her agent. 

It is also important to note that the payment of the principal or interest affects the limitation period in relation to the whole debt. 

For assistance in considering whether you are out of time to commence proceedings against a debtor and the causes of action available to you, please do not hesitate to contact the team at Cronin Miller Litigation.

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Cronin Miller Litigation is a Gold Coast based law firm specialising in resolving commercial disputes, and providing effective results for persons who have a claim of a commercial nature.